When shopping for your next home, you may come across several different types of home loans. One popular type of loan is a VA home loan. Below, we’ll discuss the primary differences between a conventional loans and VA home loans, along with what you can expect from VA home loan rates, to help you decide if this is the right type of loan for you.
What Is a Conventional Loan?
A conventional loan is the most common type of loan when you’re looking to buy a home. This type of loan isn’t insured or guaranteed by the government, unlike some other types of loans. Most conventional loans are known as conforming loans, which just means that they meet the guidelines necessary to be sold to mortgage buyers, such as Freddie Mac and Fannie Mae. Conventional loans have a relatively standardized process, as they are one of the more common types of home loans.
What are VA Loans?
A VA loan is a special type of loan that’s available for active duty service members, veterans, and spouses. With this loan, the Office of Veterans Affairs (VA) insures the loan, allowing lenders to provide significantly lower interest rates. If you’re eligible for a VA loan, they can be a great way to secure your first home at a more affordable price.
Differences Between VA Home Loans and Conventional Loans
There are a few key differences between VA home loans and conventional loans, which may make one of them better for you than the other. To start, there are the eligibility requirements. For a conventional loan, you primarily need to meet the financial requirements of the lender in order to receive a loan. For example, most lenders typically require a credit score of at least 620. For a VA loan, you need to be a current or former service member and be buying your first home. There’s no credit score requirement from the VA, however, some lenders may have one.
VA mortgage rates are also typically lower than conventional loans. This is because lenders receive a guarantee from the federal government, allowing them to offer lower VA loan interest rates.
Another difference is the minimum down payment requirement. Conventional loan rates vary but they can be as low as 3%, depending on your circumstances. With VA loans, there is no down payment requirement, which helps you with the upfront costs of a home.
Finally, there are the fees and mortgage insurance associated with each. Both types of loans come with various fees. For example, in a conventional loan, you’ll likely have an origination charge, along with some other potential fees. With VA loans, you’ll have a VA loan funding fee, a loan origination charge, and some other fees. As for mortgage insurance, VA loans don’t require it, while conventional loans typically require mortgage insurance if your down payment is less than 20%.
Learn More at The Tuttle Group
The Tuttle Group is here to assist you if you’d like to learn more about VA home loans. We can answer any questions you may have about VA mortgage rates or the eligibility requirements. If you’re eligible for a VA loan, we can also walk you through the process of obtaining your loan. To get started, please contact us today.
