The Benefits and Limitations of a VA Home Loan
Millions of people in the US are eligible for home financing with a VA home loan, and even though many veterans may have already used their VA loan benefits, it is possible to purchase a home again with VA financing by either using the loan entitlement that is remaining from the first purchase, or by having their loan entitlement restored.
Before arranging for a new mortgage to finance a home purchase, veterans should consider some of the advantages of VA home loans:
Advantages of VA Home Loans:
- VA home loans typically require no down payment, whereas a conventional home loan requires a 5% down payment, and an FHA loan requires 3.5% respectively.
- There are no monthly insurance premiums associated with a VA loan. FHA loans include upfront and annual mortgage interest charges and conventional loans typically requiring the purchase of private mortgage insurance – unless there is a 20% down payment being made.
- Seller-paid closing costs. Sellers can pay buyer’s loan-related closing costs up to 4 percent of the sales price.
- VA loans often carry lower interest rates than other loan types, averaging among the lowest of any type of mortgage loan.
- No prepayment penalties with a VA loan; you are free to pay your loan off early with no financial penalties
- Foreclosure avoidance advocacy from the VA loan program. The VA has staff members who advocate on behalf of homeowners to find alternatives to foreclosure.
VA Loan Limitations
A VA loan cannot guarantee that the home you buy, whether it be new construction or previously occupied, will be defect-free. A VA appraisal is not intended to act as an inspection of the property, and if you have any doubts as to the condition of the home, it is advisable to seek out a professional inspection before committing.
Whether you’re purchasing your first home through a VA home loan, or you’re using your loan entitlement to purchase another home, Butler Mortgage can help. Call our team of experts today at 407-931-3800 with any questions regarding VA home loans.