Five Biggest Benefits of VA Home Loans

Soldier in uniform smiling with his daughter

The purchase price isn’t the only cost associated with buying a home. Many homebuyers also pay a down payment and closing costs, which can sometimes be an obstacle to homeownership. But if you qualify for a VA home loan, getting a mortgage may be easier—and more cost-efficient.

VA home loans are insured by the U.S. Department of Veterans Affairs and available to active-duty military, veterans, reservists, National Guard service members, and their eligible spouses.

Are you thinking about getting a VA loan? Here’s a look at five of the best benefits of the VA loan program.

1. No Down Payment with a VA Home Loan
Today, most home loan programs require some type of down payment. Although you don’t need 20% down to purchase a home, a conventional home loan usually requires a minimum down payment between 3% and 5%. You’ll need a minimum 3.5% down for an FHA home loan.

A VA home loan, however, is an exception to the rule. If you have full entitlement, a VA loan will allow up to 100% financing, meaning you can buy a house with absolutely no down payment. This allows many people to buy sooner and you don’t have to drain your savings on a home purchase.

2. Buy a Home with No Mortgage Insurance
Another notable feature of a VA home loan is that you don’t pay mortgage insurance. Mortgage insurance is often required when a borrower puts down less than a 20% down payment. This is an annual premium paid monthly by the borrower, yet the insurance protects the lender in the event of default.

Private mortgage insurance with a conventional loan can range from 0.55% to 2.25% of the original loan amount per year and FHA mortgage insurance averages around 0.85% of the original loan amount per year.

Despite being a “no money down” mortgage program, VA loans don’t require that you pay mortgage insurance. This can help keep your monthly payment and mortgage costs affordable.

3. Enjoy Flexible Credit Requirements
As with any loan program, your credit history determines whether you qualify. The good news is that the U.S. Department of Veterans Affairs doesn’t set a minimum credit score for approval. Instead, each mortgage lender decides its own minimum credit score. On average, lenders set their minimum between 600 and 660.

4. Pay Limited Closing Costs
A down payment isn’t the only expense involved with a home purchase. Unless they are negotiated into the purchase of the home, borrowers are responsible for their own closing costs. These are mortgage lender and third-party fees such as the loan origination fee, the appraisal fee, and the title search fee. VA loan borrowers also pay a one-time funding fee, between 1.4% and 3.60% of the loan amount. Some veterans are free from paying this funding fee; your mortgage lender can help you determine if you are exempt.

Usually, closing costs range from 2% to 5% of the loan amount. Fortunately, the VA limits how much a lender can charge borrowers. For example, lenders can’t charge more than 1% for the loan origination fee.

The VA also prohibits other fees, too, such as prepayment penalties, broker commissions and lender attorney fees.

As a bonus, VA home loans allow sellers to pay up to 4% of a buyer’s closing costs, further reducing their out-of-pocket expense.

5. Use a VA Loan Multiple Times
If applying for a VA home loan, this isn’t a one-time benefit. It’s a lifetime benefit, so there are no limits on the number of times you can use a VA loan to buy a house.

Use the loan program to purchase another property once you’ve paid off the first loan, by either selling the home or paying off the mortgage in full.

It’s also possible to have two VA loans at the same time. If you have enough remaining entitlement after buying one house, you can use your remaining retirement to buy another home.

Final Word
A VA mortgage loan can open the door to homeownership for military service members and their eligible spouses. It’s one of the most affordable loan programs available, and with the lifetime benefit, you can use it multiple times whether you’re moving up or downsizing.

Ready to buy? Contact a local loan expert at FirstBank Mortgage to learn how a VA loan can work for you.


Disclosure: Application is required and is subject to underwriting. Not all applicants are approved. Full documentation & property insurance required. Loan secured by a lien against your property. Fees & charges apply and may vary by product and state. Terms, conditions & restrictions apply, so call for details. FirstBank Mortgage provides a variety of loan products with different rates, payments and fees. All loans are subject to credit approval. Products and services offered by FirstBank. FirstBank Mortgage is a division of FirstBank.

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