VA Home Loan program is more important than ever to service members. In recent years, lenders nationwide have tightened their lending requirements in the wake of the housing market collapse, making the VA Loan a lifeline for military homebuyers, many of whom find difficulty when faced with tough credit standards and down payment requirements.
Military homebuyers have access to one of the most unique and powerful loan programs ever created. See how the VA Loan compares to a traditional home mortgage:
> VA Loans: Conventional Loans
* 0% Down
(for qualified borrowers)
VA Loans are among the last 0% down home loans available on the market today.
Up to 20% Down
* No PMI
Since VA Loans are government backed, banks do not require you to buy Private Mortgage Insurance.
* Competitive Interest Rates
The VA guaranty gives lenders a greater degree of safety and flexibility, which typically means a more competitive rate than non-VA loans.
* Easier to Qualify
Because the loan is backed by the government, banks assume less risk and have less stringent qualification standards for VA Loans, making them easier to obtain.
> Conventional Loans :
* Conventional loans generally require down payments that can reach up to 20% to secure a home loan, pushing them out of reach for many homebuyers.
* PMI Required
Private Mortgage Insurance is a requirement for borrowers who finance more than 80% of their home's value, tacking on additional monthly expenses.
* Increased Risk for Lenders
Without government backing, banks are taking on more risk which, in turn, can result in a less-competitive interest rate on your home loan.
* Standard Qualification Procedures
Conventional options hold stricter qualification procedures that can put homeownership out of reach for some homebuyers.
Reference Link: http://valoanguidelines.org/