VA Home Loan Requirements
The down payment can be one of the biggest decisions to home ownership that every prospective home buyer must face. Indeed, even in an unobtrusively priced market, an extra 20 percent down payment effortlessly adds up to a huge number. Add the closing costs and prepaid items to the equation and a typical home buyer can be faced with a tremendous obstacle in their American dream of homeownership.
In the event that you do not have much money saved up for a down payment but feel ready to take up the responsibility of homeownership, the VA home loan program might be just the answer to your problem. The veterans home loan program offered by the Veterans Affairs to qualified servicemen and women are tough to beat.
VA vs Conventional Loan
Before you dive deep into the loan process, consider the difference between a conventional loan vs a VA loan.
A conventional loan with 20 percent or greater down payment offers:
- Lower rates of interest
- Lower payments monthly
- No PMI
- Low closing costs
While down payments less than 20 percent:
- Getting into home ownership as soon as possible
- Less money required to get a home loan
A down payment offers a few benefits, including a lower interest rate. Certainly, a veteran house loan program offers the lowest rate in the industry. Typically. a lower down payment loan program, the higher the risk to the bank. Along these lines, most banks offer better rates to borrowers who make more sizeable down payment. Indeed, even a 1 percent decrease to your interest rate can net you a huge amount over the life of the loan.
A larger down payment can take out the prerequisite to buying private mortgage insurance (PMI), reducing your monthly mortgage payment. All conventional loans will require PMI if a borrower cannot come up with 20% down payment. The VA home loan program makes it easier for qualified veterans and their eligible spouses to acquire a home with no down payment. Combine that with a low-interest rate mortgage, your regularly scheduled monthly payments are lower as compared to a conventional loan.