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VA versus conventional loans_ pros and cons for veterans

Are you a current or former member of the military seeking the best mortgage option for your new home? Understanding the differences between VA home loans and conventional mortgages is crucial in making an informed decision. At 1st United Mortgage, we recognize the unique needs of veterans and aim to provide comprehensive guidance tailored to your circumstances. Let’s explore the advantages and disadvantages of both loan types to help you navigate the path to homeownership confidently.

Benefits of VA Loan

VA loans offer numerous benefits that make them an attractive option for eligible veterans:

  1. No Down Payment: Unlike conventional mortgages, VA loans do not require a down payment, making homeownership more accessible for veterans. This eliminates the need for private mortgage insurance (PMI), resulting in significant cost savings over time.
  2. Lower Interest Rates: VA loans typically feature lower interest rates than conventional mortgages, translating into reduced monthly payments and long-term savings for borrowers.
  3. Easier Qualification: VA loans have more lenient credit requirements, allowing veterans with lower credit scores to qualify for financing. Additionally, the VA loan program offers flexibility in income and employment verification, making it easier for self-employed individuals and those with irregular income streams to secure financing.
  4. No Appraisal or Credit Review: VA loans streamline the underwriting process by eliminating the need for a property appraisal and credit review, expediting the loan approval process, and reducing paperwork for borrowers.
  5. No Out-of-Pocket Expenses: With a VA loan, veterans can finance the closing costs and other fees associated with the loan, minimizing out-of-pocket expenses during the home-buying process.

When a VA Loan Doesn’t Make Sense

While VA loans offer significant advantages, there are scenarios where a conventional mortgage may be a better fit:

  1. Large Down Payment: If you have sufficient funds for a down payment of at least 20% and are not exempt from the VA funding fee, a conventional loan may offer lower overall costs by avoiding the funding fee and PMI.
  2. Non-Primary Residences: VA loans are designed for financing primary residences and cannot be used for second homes or investment properties. If you want to purchase a vacation home or rental property, a conventional loan may be the only option.
  3. Occupancy Requirements: VA loans require borrowers to occupy the purchased property within a certain timeframe, typically 60 days after closing. A conventional loan may provide more flexibility if you’re uncertain about your future residency due to military service obligations.

Let’s take a closer look at how VA loans stack up against conventional mortgages:

VA Loans Conventional Loans
0% Down Payment Up to 20% Down Payment
No PMI PMI Required for >80% LTV
Competitive Interest Rates Higher Interest Rates
Easier Qualification Stricter Qualification Criteria


Ready to explore your mortgage options? Contact 1st United Mortgage today at (931) 548-1985 or visit our website to speak with one of our experienced loan specialists. We’re here to guide you through the homebuying process and help you find the loan that best fits your needs as a veteran.

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