Comparing Veterans Home Loans

Let’s take a brief look at the comparison between VA home loans, conventional mortgages, and the government-backed FHA loans:

VA Home Loans: VA home loans are one of the few remaining lending options that do not need a down payment.

Conventional Loans: Twenty percent or more. Even though 3% down payments do exist, the majority of borrowers choose to put down larger sums.

FHA loan: requires a minimum down payment of 3.5 percent.

Private Mortgage Insurance PMI Requirement

VA Home Loans: Absence of PMI
Private mortgage insurance is not necessary for VA home loans, even with the 0% down payment option.

Conventional Home Loans: Must Have PMI
Unless you put down 20%, private mortgage insurance is typically required for conventional loans.

FHA Loan: Primary + Secondary MIP
Mortgage insurance payments are paid annually in addition to the upfront cost by FHA buyers.

Loan Rates

VA Home Loans: Affordable Loan Rates
Based on the statistics provided by Optimal Blue, VA home loans offer the market’s lowest average interest rate.

Conventional Home Loans: Affordable Prices
The finest conventional mortgage rates are generally only available to buyers with very high credit scores.

FHA Loan: Rates That Are Moderate
Optimal Blue research shows that FHA loan rates are generally higher than VA home loan rates but lower than conventional loans.

Original Costs

VA Home Loans: Most Affordable original prices
HMDA data shows that last year, the average origination cost for VA home loans was the lowest.

Conventional Loans: Prices in between
Compared to last year, HMDA data shows that average charges for conventional loan origination were 22% higher.

FHA Loan: Maximum Initial Expenses
Compared to last year, HMDA data shows that the average price for originating a conventional credit was 27% higher.

Requirements

VA Home Loans: Simpler Requirements

Veterans and active-duty service members can increase their chances of homeownership through the Veterans Affairs loan program, an earned benefit. One distinguishing feature of the program is the loosening of stringent credit underwriting standards.

Conventional Loans: Regular Processes
Traditional mortgages can be more difficult to qualify for due to tighter underwriting standards, larger down payments, and higher minimum credit scores compared to VA home loans.

FHA Loan: Enrollment is Also Made Simpler
The Federal Housing Administration (FHA) developed more lenient underwriting standards and loan programs to help people from lower and moderate income brackets buy homes.

If you want to make the right financial choice, you need to know all of your mortgage options. There is no guarantee that a VA home loan would be the best option for you simply because you are a veteran. However, this often ends up being the best financially feasible way for veterans and active-duty military personnel to buy a property.

If you need assistance calculating your mortgage alternatives, a loan professional at Veterans United can assist you with that.

Available VA Home Loans Options

Veterans who qualify can take advantage of a variety of strong home financing choices through the VA home loan benefit.

VA Purchase Loan

With a VA home loan, veterans and active-duty military personnel can buy a house or home improvement project with no money down. Any type of property, including new construction, duplexes, condominiums, prefabricated homes, and single-family homes, can be purchased by Veterans with a VA purchase loan.

Lenders may have different policies and rules. These VA purchase loan options may not be available from all lenders.

VA IRRL

Of the two refinancing choices offered by the VA loan program, the one that the majority of Veterans choose is the VA Interest Rate Reduction Refinance Loan (IRRRL).

These low-interest refinance loans are sometimes known as VA Streamlines since they are often not subject to credit underwriting, income verification, or appraisal requirements.

Veterans who are already in possession of a VA home loan are the only ones eligible for the VA IRRRL. Additionally, you must meet certain criteria, such as having a shorter repayment period and a lower interest rate compared to your previous one. These factors contribute to the goal of providing Veterans with full financial compensation.

VA Cash-Out Refinance

Homeowners who qualify can use the VA Cash-Out refinancing to take out a loan against the equity in their property. Veterans who do not currently have a VA home loan can still apply for one of these loans. Homeowners who meet the requirements can usually refinance up to 90% of the value of their property.

Lenders may have different standards for loan-to-value ratios and other lending criteria. This is a great alternative for veterans with non-VA mortgages who want to refinance their rates and terms without having to take out a large sum of money.

Energy Efficient VA Mortgage

Homebuyers and refinancees who are veterans can get supplemental loans from the VA to cover the cost of energy efficiency upgrades.

Qualifying renovations, such as storm or thermal windows, heat pumps, and solar heating and cooling systems, can be funded by the VA up to an additional $6,000. Appliances, window air conditioners, and other non-permanent modifications cannot be purchased using this option