The VA loan program is a great benefit for veterans and with 21 million VA home loans it seems like a no-brainer that veterans would take advantage of this benefit. But should a veteran always use a VA loan? The answer is no, but let me explain.
There are many reasons to use the VA loan program. One of the biggest perks of this program is the no down payment. The VA does not issue the loans but they are guaranteed by the government which gives lenders confidence in issuing the loans.
- You don’t have to have a down payment as long as your loan doesn’t exceed $417,000.
- Lower closing costs as the VA restricts the types of closing costs a veteran can pay.
- No monthly mortgage insurance premiums like you find with other loan programs.
- VA loans also allow for those with higher debt ratios and lower credit scores to qualify for loans.
Now all this may make you wonder, well why wouldn’t I want to use a VA loan? Well there are a few things that may make you consider not using a VA loan.
- If you’re buying a fixer-upper home, you won’t be able to use a VA loan as they are mainly for “move-in ready” homes.
- While you can reuse a VA loan, you can’t get another VA loan before you pay the other one off.
- If the home you’re buying isn’t going to be your primary residence then you’ll need to consider another loan program.
- There is a limit on VA loan co-borrowers who are not a spouse or another veteran.
- If you have a 20% or larger down payment it may be wise to consider not using a VA loan to avoid the VA funding fee.
So when you start your home search it would be a good idea to check into all of your home loan options. Knowing what’s available to you can save you time and money, and even if you are a veteran, you may not always want to use a VA loan.