VA Vs Conventional Loans

VA Vs Conventional Loans

VA Vs. Conventional Loans Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure

Advertiser Disclosure

We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.

How We Make Money

The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: kohei_hara/Getty Images July 13, 2022 This article was generated using automation technology and thoroughly edited and fact-checked by an editor on our editorial staff. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Bankrate logo

The Bankrate promise

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo

The Bankrate promise

Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo

Editorial integrity

Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.

Key Principles

We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.

Editorial Independence

Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo

How we make money

You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. offer 100-percent home financing to qualified veterans, active-duty servicemembers and surviving spouses. If you’re eligible for a VA loan, you might assume it’s undoubtedly a better option than a . However, it’s not always all upside. Here’s how they compare.

VA loans Overview

A VA loan is a mortgage for members of the military and veterans that can be used to purchase, build or refinance a home. It’s backed by the U.S. Department of Veterans Affairs (VA), meaning the VA guarantees the loan on behalf of the mortgage lender in the event the borrower stops making payments. The benefits of a VA loan include no and no mortgage insurance requirements. VA loans also tend to have lower and looser credit standards. VA loan borrowers pay a , however, a one-time charge ranging from 1.4 percent to 3.6 percent of the loan principal. The home must also be a primary residence (meaning you’ll live there), not a second home or investment property. VA loans are available from VA-approved mortgage lenders. There are national lenders and even some credit unions that specialize in this type of loan.

Conventional loans Overview

A conventional loan is the most popular type of mortgage. In contrast to a VA loan, it isn’t backed by the government. It’s available through many kinds of mortgage lenders, including banks and online lenders. If you qualify, you can obtain a conventional loan with a down payment as low as 3 percent. However, if you put down less than 20 percent, you’ll need to pay for for a time. You’ll most likely pay the premiums with your monthly mortgage payment. Unlike a VA loan, conventional loans also have a minimum credit score requirement of 620, although to get the best interest rate and terms, you’ll need a 740 or higher. VA loan vs. conventional loan requirements VA loan Conventional loan Eligible properties Primary residence only Primary and secondary residences; investment properties Credit score minimum No formal minimum set by VA; many lenders look for 620 or higher 620 Debt-to-income (DTI) ratio maximum No formal maximum set by VA; many lenders look for 41 percent or lower 43 percent Down payment minimum Zero percent 3 percent Loan limits No limit unless borrower has defaulted in the past or has two or more VA loans $647,200; $970,800 in costlier housing markets Mortgage insurance No mortgage insurance Mortgage insurance required if down payment lower than 20 percent Fees Closing costs plus funding fee ranging from 1.4 percent to 3.6 percent of loan principal Closing costs

Which is right for you

If you qualify for both a VA and conventional loan, begin by . The rates on VA loans can sometimes be more attractive than , but it depends on the mortgage lender you work with and other factors. If you can get a lower rate with a VA loan, that might make it worth it, especially now as rates move up. If your credit score needs work, however, a VA loan might offer more flexibility than a conventional loan. (The most flexible loan in terms of credit, though, is an FHA loan — here’s how .) Rates and credit aside, if you can afford to put 20 percent down, it might be better to go with a conventional loan to avoid the VA funding fee. Unlike a VA loan with no money down, you’ll also have some equity in the home right away if you get a conventional loan with 20 percent (or any amount) down. Keep in mind that with a VA loan, you can’t buy a vacation home or investment property, either. If that’s your goal, you’ll need to shop for a conventional or investment property loan. SHARE: This article was generated using automation technology and thoroughly edited and fact-checked by an editor on our editorial staff. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters.

Related Articles

Share:
0 comments

Comments (0)

Leave a Comment

Minimum 10 characters required

* All fields are required. Comments are moderated before appearing.

No comments yet. Be the first to comment!