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    Homebuying & Selling | 3 min read

    Comparing Traditional Mortgages and VA Loans for Veterans

    If you serve or have served in the military, you know the demands of the job can dramatically impact you and your family. The great news is, along with those sacrifices, there are some amazing benefits for our men and women in uniform.

    One of the most significant benefits worth taking advantage of is the Veterans Affairs home loan (VA loan). Among other housing-related programs in connection with the U.S. Department of Veteran Affairs (VA), it provides a financing option for eligible service members, veterans, and surviving spouses to purchase, build, and/or maintain a primary residence.

    VA loans are available through VA-qualified lenders like banks and mortgage companies to provide home loan financing with favorable options. For military members, the VA loan program enables eligible veterans and active-duty military personnel to finance up to 100% of a home’s value.

    In this blog post, we’ll highlight the main differences between VA loans and traditional mortgages, review the common eligibility requirements, and give you tips for taking advantage of your VA loan.

    Comparing Traditional Mortgages and VA Loans

    Military members and former military members are able to take advantage of one of the most impactful and powerful loan programs in the country. Consider the following points of comparison:

    Down Payment

    • Traditional loans typically require down payments of 3.5% to 5% of the sales price of the home to secure a loan, which prices many potential homebuyers out of purchasing, pushing them out of reach for many homebuyers.
    • With a VA Loan, you aren’t expected to put any money up for a down payment. This makes using a VA loan much more attractive to buyers.

    Private Mortgage Insurance

    • For borrowers who finance more than 80% of their home’s value, traditional loans typically require the homeowner to purchase private mortgage insurance. This adds another monthly expense to mortgage payments.
    • Since VA loans are backed by the government, lenders do not require you to purchase private mortgage insurance.

    Interest Rates

    • To qualify for the best traditional mortgage rates, buyers usually need top-tier credit scores. Individuals with credit scores under 620 will have a difficult time applying for a conventional loan.
    • With VA loans, veterans can access low loan rates without having sky-high credit. On average, VA loans have enjoyed the lowest fixed interest rate on the market for more than five years.

    Loan Qualification

    • Traditional mortgage options generally require higher credit scores and larger down payments than VA loans. They are also associated with stricter underwriting guidelines.
    • While serving in the military isn’t easy, it can make it easier to qualify for a home loan. VA loans are characterized by more flexible options and forgiving credit underwriting guidelines.

    Qualifying for a VA Home Loan

    According to the VA, the length of your service or service commitment and/or duty status may determine your eligibility for specific home loan benefits. After about six months of service, most active-duty military personnel, members of all military branches, and veterans qualify to apply for a VA home loan. Reservists and members of the National Guard can apply after six years unless they are called to active duty before that.

    Here are some common qualifications for a VA home loan:

    • Serving 90 consecutive days of active service during wartime
    • Serving 181 days of active service during peacetime
    • Serving as an active member of the National Guard or Reserves for six years or more
    • Certain Members of the Army National Guard or Air National Guard who served 90 days full-time National Guard duty, at least 30 days of those must have been consecutive
    • An unmarried spouse of a service member who died in the line of duty or from service-related reasons

    It’s important to remember that qualifying for a VA loan is a separate process from qualifying for a mortgage. Make sure you partner with a loan officer who can help guide you through the entire loan process, from gathering up must-have documents, to prequalification and closing.

    If you're a veteran and you're considering purchasing or refinancing a home, make sure you check it out—don’t miss out on all the perks you and your family deserve for your military service!

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    Tamara Tapman

    Tamara Tapman is a military veteran’s community representative and certified Texas Real Estate Commission Mandatory Continuing Education (MCE) instructor. As the former Mortgage Lender Liaison and Branch Manager at the Texas Veterans Land Board for more than two decades, she has been a devoted military advocate, helping veterans to take advantage of their benefits and obtain low-interest home loans.

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