No Down Payment
One of the huge benefits in the VA loan program is that no down payment or mortgage insurance is required. Conventional mortgages require a minimum down payment of 5 percent. The VA program allows financing of up to 105 percent of the sales price or appraised value of the home, and borrowers can finance the closing cost of the mortgage as well. So a veteran can purchase a home without any money out of their pocket with a VA loan, unlike a conventional loan. Even with FHA loans, VA mortgages offer so much more advantages regarding interest rates, credit scores, mortgage insurance and down payments.
A lot of concerns with getting a loan is if your credit score is good enough for the type of loan you want. The best thing about the VA loan program is they have looser requirements with credit score than FHA loans, and the conventional mortgage industry. The government sets no minimum income or credit score standards for VA loans. In most cases if a borrower has a credit score of at least 580 they are able to be accepted for a VA loan, with a conventional loan you have to have at least a 620. In some cases with a conventional loan and a borrower has a credit score under 720, the borrower must make a larger down payment of at least 20 percent. The great thing about a VA loan is there is no down payment necessary with a lower credit score. They’re completely open to borrowers with bad credit, and the rates are reasonable.
Rates with a VA Loan are Very Low
Interest Rates with a VA Loan are very low compared to other types of loans. With non-VA loans, borrowers pay a higher rate for every 20 points their credit score drops below 720. But with a VA loan, borrowers get the same low rate, whether their credit score is 605 or 785. That’s one of the things that make VA loans such an amazing deal for any veteran or active-duty military families who need a mortgage. Veterans don’t need to worry about being refused because they don’t have money for a down payment or have a bad credit score. Having a VA loan, there are so many more benefits than negatives. With other types there is, so U.S veterans are most likely making the best decision when choosing a VA loan.