What Is the Benefit of a VA Home Loan?

by Marissa Willman

Overview

The U.S. government offers an array of benefits to individuals who serve the country after military duty. Among these benefits is the VA home loan, which is available to veterans who meet eligibility requirements. This loan is beneficial to prospective homeowners as it offers a low interest rate with no down payment or mortgage insurance required. Veterans who would not otherwise qualify for a home loan due to poor credit or no down payment are usually able to finance a home through the VA program.
No Down Payment

VA home loans do not require down payments toward the transaction. This relieves the financial burden of having to provide up to 20 percent of the purchase price as a down payment.

Low Interest Rates

Since VA home loans are federally sponsored, interest rates are .5 to 1 percent lower than standard interest rates. Borrowers can save thousands of dollars in interest payments with a lower interest rate.
No Mortgage Insurance

Banks generally require borrowers to pay for private mortgage insurance to ensure the lender will be repaid in cases of default. VA home loans are insured by the government; applicants do not need to invest in private insurance.
Low Monthly Payments

With low interest rates and no monthly mortgage insurance, the monthly mortgage payment for a VA home loan is substantially lower than a traditional bank loan.
Accessibility

Lenders tend to be less strict about qualification guidelines with applicants who are applying under the VA program. This is because the loan is considered low-risk since the government is insuring the loan.