Three Benefits of VA Loan vs Conventional Loans

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Everyone knows buying a home is an excellent investment. Ideally, the value of the home will grow over time, and when you’re ready to sell, you’ll make some money off of it. Some might say that’s a gamble, since you have no way of looking in a crystal ball and ensuring that the home you purchase will actually gain value over time.


However, even if you remove the possibility of increased value from the equation, purchasing a home is still a great investment. If you don’t purchase a home, you still have to live somewhere. Instead of paying your mortgage, you pay the same amount (or more, frankly) in rent. Your rent money is cash that you’ll never see again. When you make payments on your mortgage, you’re adding equity in your home. You’ll see that money again one day, even if you sell it for the same amount that you bought it for.


You might feel intimidated when it comes to getting a loan for a home. There are so many options and you might feel concerned you wouldn’t be approved even if you knew which type of loan to get at all. You could get a conventional loan. If you haven’t purchased a home in a few years, you might benefit from a First Time Homebuyer’s Loan (FHA loan). Depending on your line of work, you might qualify for a veterans loan program (often called VA loans or vet loans).


While there are numerous types of loans, and we could talk about them all day long, today we’re going to cover the benefits of VA loan vs conventional loans.

Three Benefits of VA Loan vs Conventional Loans

  1. VA loans allow you to get into a home if you don’t have a ton of cash money.

    When you apply for a conventional loan, the bank who is lending you tens of thousands of dollars will want you to have at least 20% of the cost of the home for a down payment. This shows them that you’re serious about the investment and won’t be walking away from your mortgage as soon as the going gets tough.


    While this makes good business sense, when you get a VA loan for your mortgage, Uncle Sam is backing your loan. That means that the bank you borrow from is not taking as much of a risk on your loan. If you don’t have much money to shell out of a down payment, you might find that this is one of the most enticing benefits of VA loan vs conventional loans.
  2. VA loans don’t require you to pay for mortgage insurance.
    Another safety net that lending banks have when they extend a loan for a huge some of money to a home buyer is requiring them to take on mortgage insurance. If you walked away from your mortgage, the bank could recover the balance from the mortgage insurance company.


    If you are financing more than 80% of the cost of the home you are buying, your lender will require you to pay for mortgage insurance. It saves their hiney, but for you it’s just money going down the drain. Since the government backs your mortgage when you get a VA loan, you don’t have to pay for mortgage insurance. This saves you money in the longrun and it also improves your monthly cash flow. This is another huge plus when we discuss the benefits of VA loan vs conventional loans.
  3. You might qualify for a VA loan even if you can’t get a conventional loan.

    Mortgage lenders take a huge risk when extend a loan for a home. As such, they can be really picky when qualifying borrowers for loans. If your credit score isn’t quite high enough or your are deemed a risk for any other reason, you might struggle to get approved for a conventional loan.


    However, because the federal government is backing your loan when you apply for a VA loan, the bank is taking a significantly lower risk on it. If you walk, they’ll still get their money. This affords them a little wiggle room with the standards they require in order to extend a loan to you. If you can’t get a conventional mortgage, you might have better luck with a VA loan.

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