If this were an MMA fight, VA would have the knock down to rear naked choke and tap out within 30 seconds of the first round. Overall if you qualify for a VA loan and you plan to have less than a 20% down payment or equity in the case of a refinance, a VA loan should be your only choice. Below are how the judges will score the bout.
No Down Payment Requirement on VA Loans
Obviously this is a big factor for those who don't have the money to put down on a mortgage loan. Conventional loans require 5% down payment which can certainly add up quickly the larger the home you look to purchase.
VA Loans Don't Have PMI
This can lower your payment significantly compared to the high priced PMI charged on conventional loans and also make it easier to qualify for a loan as your debt to income ratios will be lower.
Lower Credit Requirements for VA Loans
This is a huge benefit vs the conventional loan. A customer can get approved for a VA loan with a credit score as low as 620. In most cases, customers looking for conventional loans will have to look for a different product if their credit score drops below 660 and in some cases, 680.
Higher Debt to Income Ceilings on VA Loans
This too is a tremendous benefit for Veterans and current military who might not be able to show a significant monthly income to qualify. Conventional loans, in most cases, will deny the borrower that has a total debt to income ratio of over 45%. This ratio is figured by taking the TOTAL MONTHLY DEBTS including property tax, home owner's insurance, home association dues and minimum non-mortgage debt payments, and dividing it by the TOTAL GROSS MONTHLY INCOME.
So on a conventional loan payment of $1,100 (Principal and Interest), Monthly tax and insurance of $400, PMI payment of $100 and total monthly debt payments of $400, your total monthly payments would be $2,000. For a conventional loan, your monthly gross income could not be less than $4,444.44 or $53,333 per year. However, on a VA loan, your income could be as low as $3,333.33 or $40,000 per year and qualify for the same loan.
VA Loans Are Assumable
This is a tremendous benefit for Veterans looking to sell their home. The buyer can literally have a rate lower than the market rates making purchasing the house much more attractive. You can see how this would help sell your house in a tough market and gain an advantage over some other homes in your area.
No Lender Fees
If you fill out an Inquiry Form Here, you'll be connected to a VA Mortgage Specialist that will charge you Zero Fees for your VA loan. That means NO Bank Fees, NO Broker Fees, NO Processing Fees, NO Underwriting Fees and especially NO ORIGINATION FEES.