Using your VA loan benefit is a great way to purchase a home with no money down. This can mean earlier home ownership for military members, Veterans, and their families. The favorable loan terms that often come with VA loans can also help home buyers save a lot of money by providing lower interest rates and no PMI requirement.
No Down Payment Required
A VA-backed purchase loan may allow eligible borrowers to buy without a down payment. Down-payment requirements can depend on entitlement, the lender, and the relationship between purchase price and appraised value. Read the official guidance.
No Private Mortgage Insurance
Loans that require less than 20% of the purchase price as a down payment often require the borrower to pay Private Mortgage Insurance, or PMI, until they reach the 20% value. PMI provides insurance for the lender, should the borrower be unable to make their monthly payments.
Exact PMI payments will depend on your credit score and the amount of money that you are putting down. With the VA loan, you do not need to worry about or pay PMI, no matter how much you put down as a down payment.
Low Interest Rates
Compare loan estimates using the same loan amount and term; rates, fees, and total costs vary. Read the official guidance.
No Payment for Paying Off Early
Some loans include a stipulation that any pre-payment triggers a penalty payment. Paying off a loan early can save the borrower money in interest but results in less overall payment to the lender, which is why so many include a pre-payment penalty in their loan terms.
The VA loan does not include a pre-payment penalty, making it a great option for those wanting to pay off their mortgage early.
Using Your BAH
When qualifying for a mortgage, Basic Allowance for Housing (BAH) counts as income. This benefit can be used to pay a mortgage, home expenses, or other lifestyle costs. BAH varies based on cost-of-living in your specific location, paygrade, and number of dependent family members.