What is a VA Home Loan?
The VA Home Loan program is the most powerful home loan program on the market for veterans and military families. These flexible, government-backed loans come with significant benefits that open the doors of homeownership to veterans who might otherwise struggle to obtain financing. These signature benefits include:
No Down Payment
Saving money and building credit can be difficult for service members who are constantly on the move. With the VA Loan, qualified borrowers can finance 100 percent of the home’s value without putting down a dime.
No Private Mortgage Insurance
Many conventional lenders require borrowers to pay private mortgage insurance unless they’re able to put down at least 20 percent, which is a tough task for many Veterans. Private mortgage insurance (PMI) is an insurance that protects lenders in case of a borrower default. With a VA Home Loan, however, there is no PMI. This is because the federal government backs all VA Mortgage Loans and assumes the risk on behalf of the borrower that is typically covered by the PMI. This VA Mortgage Loan allows you to build more equity in your house, effectively saving you thousands of dollars over the life of your mortgage.
Competitive Interest Rate
VA Mortgage rates on home loans are based on risk assumed by the bank to finance the loan. Because the VA backs each VA Loan with a guaranty, financial institutions carry less risk and can offer VA loan rates that are typically 0.5% lower or more than conventional interest rates. Pair that lower interest rate with the ability to purchase a home with no money down and no private mortgage insurance and the savings start adding up significantly.