You’d rather use your savings for something else (like an emergency fund).You’re having trouble saving for a down payment.If any of these criteria apply to you, then a VA loan might make the most sense:

The qualification requirements are tighter for secondary residences and investment properties, however.įor example, you must put at least 10% down to buy a second home and at least 15% down to buy an investment property. You can buy your main home, second home, or an investment property with a conventional mortgage. Here’s the exception: If you have a VA loan on your current home and you have to move, but you don’t want to sell that home, you can start using it as a second home or investment property. Your monthly payment will also be slightly higher. If it’s added to the mortgage, it will cost more in the long run because you are paying interest on it for your entire loan term. The fee can be paid in cash at closing or added to the mortgage. The fee can range from 1.4% to 3.6% of the total loan amount, depending on your down payment and if you’re a first-time VA borrower. While VA loans don’t require low-down-payment borrowers to pay PMI, they often require them to pay a VA funding fee. But they do require borrowers to pay a substantial fee that conventional loans don’t. VA loans are more generous than other low-down-payment mortgages because they don’t require monthly mortgage insurance payments. It might be possible to put 0% down if you qualify for a low-income or first-time homebuyer program. Conventional loansĬonventional loans require at least 3% down. So, you’ll probably still need some cash to buy a home with a VA loan. Tip: It’s standard practice to make an earnest money deposit when you enter a contract with the seller, even if you’re not making a down payment. Fortunately, Credible streamlines this process and makes comparing multiple lenders easy. Shopping around for a mortgage can be stressful. Conventional loansįor borrowers with excellent credit scores of 720 or higher, conventional mortgage rates will look similar to VA mortgage rates. In 2020, the average 30-year rate on a VA loan was 3.02%, compared to 3.26% for conventional loans. In fact, on average, they’re slightly lower. Good news: VA loan interest rates are competitive with the best conventional loan rates. VA loans can be a bit cheaper, but it depends on the lender and your profile. When it comes to mortgage rates for VA loans and conventional loans, your financial strength as a borrower may matter more than the type of loan you’re applying for. None, but you may have to pay a VA funding feeĬan be used for primary residence, second home, or investment property None, but lenders may impose a minimum, such as 640

Here’s a quick look at how VA loans compare to conventional loans:

While VA loans have more relaxed financial standards than conventional loans, they also come with stricter property standards. Department of Veteran Affairs, while a conventional loan is offered through a private lender and has no government guarantee. The differences between VA and conventional loansĪ VA loan is insured by the U.S. Here are the key differences between VA and conventional loans: They impose a funding fee that conventional loans don’t, and putting nothing down could mean paying more interest in the long run. That said, a VA home loan may not always be the best choice for eligible borrowers. They don’t require a down payment, private mortgage insurance, or a minimum credit score. VA loans, available to qualifying military service members and eligible surviving spouses, compare favorably to conventional loans in several ways. NMLS # 1681276, is referred to here as 'Credible.' Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Our goal is to give you the tools and confidence you need to improve your finances.

Mortgage payment calculator va loan