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Always Here Properties, LLC
Marina Prieto, Always Here Properties, LLCPhone: (254) 289-0672
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The Major Benefits & Drawbacks to VA Loans

by Marina Prieto 01/14/2023

If you're a veteran, a VA loan might seem like the perfect option for financing a home. However, there are some important differences between VA and conventional loans which could affect your decision. Here are some of the major pros and cons of VA loans to help you make the best financial choice:

VA Loan Pros

No Down Payment

VA loans do not require a down payment, which could potentially save you thousands of dollars on your home purchase. Conventional loans require down payments of a minimum of 3% of the home's purchase price, and higher down payments are often encouraged in tough markets. However, with a VA loan you can skip the down payment step.

No PMI

Private Mortgage Insurance is required by lenders if you fail to meet a specific financial criteria. Examples could be a lower than normal down payment, low credit score or a high debt-to-income ratio. The policy protects the lender in case you default on the loan. VA loans don't require you to buy a PMI policy, saving you time and money.

No Prepayment Penalty

Some loan options on the market charge a penalty for paying off your mortgage before the end of its established term. VA loans don't have any penalties for prepayment, so you're free to spend your money however you choose.

VA Loan Cons

VA Funding Fee

VA loans do come with a specific upfront cost called a funding fee. Funding fees go toward keeping VA loans available to future veterans. There are some ways to be exempt from paying the fee, but it's a mandatory expense in most cases.

Primary Residences Only

Another major drawback to VA loans is that they are restricted based on property use. You can only use a VA loan to finance a primary residence. Therefore, you couldn't use it to buy a vacation home, rental property or other type of investment.

Is a VA loan the right choice for you? Consider these pros and cons when making your decision to determine whether it's the best solution for your homebuying needs.

About the Author
Author

Marina Prieto

I take a personal approach to helping you sell your home and getting your home ready for the sale market, showing you the comps for homes that compare to yours, doing a net sheet so you can see what your proceeds will be at closing, showing you how the appraiser appraises your home for the new buyer, answering all your concerns on what needs to be done for marketing your home.