See which type of loan could get you the best mortgage terms and rates.
If you qualify for a Veterans Association (VA) home loan, it’s worth considering some of the benefits and drawbacks of a VA loan vs. a conventional loan.
Surveys show that many veterans either don’t realize that VA loans exist or are misinformed about how they work. Before deciding which is right for you, find out how to get the best possible loan rates and options for your new home.
How do conventional loans differ from VA loans?
The biggest difference between conventional and VA loans is VA loans are backed by the government, protecting lenders in the case you can’t pay back your loan. Conventional loans require borrowers to purchase private mortgage insurance (PMI). This can cost hundreds of dollars a month and doesn’t protect you — it protects the bank in case you default on your loan.
Even with the savings on a down payment and PMI, there are pros and cons to both types of loans.
Conventional vs. VA loans
Benefit and drawbacks of conventional loans
Benefit and drawbacks of VA loans
Ralph has served for 10 years in the National Guard and is therefore eligible for a VA loan. He’s looking to purchase his first home, which would be his primary residence, but only has a small amount saved up for a down payment. In Ralph’s case, getting a VA loan for his home would most likely make the most sense, since he wouldn’t be required to have a down payment and won’t have to pay for private mortgage insurance.
Understanding your loan options is an important first step when buying a home or investment property. In most cases, if your home and property are eligible for a VA loan, the benefits outweigh the drawbacks.
If you don’t qualify for a VA loan, there are a number of conventional loan options and programs that can help make your new home as affordable as possible.
Before making a decision, check out a few different lenders and compare all of your home loan options.