VA Loans vs. Conventional Loans

Dated: February 11 2021

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VA Loans vs. Conventional Loans


As a veteran and a homeowner, I personally understand and empathize with veterans who are considering buying or selling their home. Luckily, I'm well-versed in the housing market - That's why I'm here to assist any veterans with reaching their real estate goals. Don't forget that we're in this together! I want to discuss some of the basic differences between Veteran Affairs (VA) loans and conventional loans, as this can be a perk for some veterans. 


Who qualifies for a VA loan?

To apply for a VA loan, you must first be eligible, which includes meeting basic qualifications based on length of service, duty status, and character of service. More specifically: serve 90 consecutive days during wartime, 181 consecutive days during peacetime, 6 or more years of service on National Guard or Reserves, or you're the spouse of a service member who died in the line of duty. 


Where can you get a VA loan?

VA loans are issued by private lenders like mortgage companies or banks, and they're backed by the U.S. Department of Veteran Affairs. To apply for a VA loan, you need to go directly through your mortgage company or bank, and you will need to meet their own specific lending requirements. In addition, you may need a Certificate of Eligibility (COE), which states that you're able to qualify for VA benefits. 


What's the purpose of a VA loan?

A VA loan helps veterans, service members, and widowed service spouses purchase a home by offering $0 down payment and often offer lower interest, accept lower credit scores than conventional loans, and allow for higher debt to income ratios. This can be a big help in purchasing a home. A VA loan also assists disabled vets with making modifications to their homes, and even offers other benefits like property tax reductions. 


How is it different from a conventional loan?

A conventional loan typically requires a down payment of around 5%, whereas a VA loan requires $0. This means you don't have to make a down payment to secure your financing. VA loans don't require private mortgage insurance (PMI), but they do add an additional funding fee that goes to the VA to back your loan. VA loans can also take more time and energy to process. 


Should veterans always choose VA loans?

Sometimes it's in your best interest to accept the VA loan, but other times, a conventional loan may be the better option. It's all based on your specific situation. You should always speak with your realtor to learn your options and potential outcomes. Whatever you decide, your agent will be there guiding you every step of the way!


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Sherri Gramlich

I am a full-time realtor with Mi Choice Realty, I cover the Downriver Area, but will drive anywhere in Southeast Michigan if that is where you need me. I have been in Real Estate for over 4 years of ....

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