VA Loan Pros and Cons: Low-Cost Mortgages for Veterans and More

At The Federal Savings Bank, we’re proud to help our nation’s heroes learn about their options when it comes to their mortgage. Knowing VA loan pros and cons can help prepare you to make the best decision for you and your family when the time comes. You might also seek out a VA loan if you’re interested in building a new home or refinancing your home for cash or a lower rate. Whatever your reasons, there are perks that apply to all kinds of VA loans. 

What Makes VA Loans Such a Great Option for Homeowners? 

There are a couple of big pros to VA loans: 

• No down payment requirement. If qualified, the Department of Veterans Affairs doesn’t require you to put down any money on your new home, though some lenders might require you to.  
• Competitive interest rates. As a qualified VA borrower, you’ll be eligible for some competitive interest rates available to you. Lower interest will save you and your family a lot of money over the life of the loan.  
• Credit flexibility. The U.S. Department of Veterans Affairs doesn’t set a minimum credit score for VA loans. Many lenders would still like you to have credit that is considered “Fair” or better by the major credit bureaus.  
• No PMI requirement. Some conventional home loans might require you pay for private mortgage insurance (PMI) each month, particularly if you have a low FICO score. VA loans, on the other hand, never require PMI. 
• 100% loan-to-value refinancing. If you choose to refinance with a VA loan, you may borrow cash up to 100% of the home’s appraised value. Conventional loans typically cap at 97%. 

Are There Drawbacks for VA Loans? 

Just as there are some drawbacks to conventional and FHA loans, there are a couple drawbacks to VA loans that you should be aware of: 

• VA funding fee. This one-time fee ranges from 0.5-3.6% of the loan depending on a few factors. If it’s your first time taking out a VA mortgage, you will pay less than repeat borrowers. You can choose to finance this fee over the life of your loan, pay the fee at closing, or ask your seller to pay the fee.  

• VA loan eligibility. You are not automatically eligible for a VA loan when you join up. You must meet one of the following requirements: 

• During wartime, you served 90 consecutive days of active service. 

• During peacetime, you served 181 days of active service. 

• You have 6 creditable years in the Selected Reserve. 

• Your spouse either died in the line of duty or died as the result of a service-related disability. 

*For more detailed information about VA eligibility, please visit the VA website.  

Bonus: Lifetime Loans for Veterans  

Your VA perks are yours for life. So long as you repay any prior VA loan, you should be able to take out a VA loan on your next primary residence. And if you pay off your VA loan and choose not to sell your current home, you may still be eligible to take a VA loan on your next primary residence for one time only. Afterward, you must dispose of the property if you wish to access a VA loan. 

These are the primary pros and cons of VA loans. As your family grows and your needs change, the VA loan will remain a steady and excellent option for you as a veteran or service member. Because there is no down payment requirement, and interest rates are competitive, VA loans can save you money from day one. For assistance navigating the VA loan process, contact one of the many veteran VA loan specialists at The Federal Savings Bank at +1 877-788-2520.  

Subject to credit approval. Terms and conditions may apply. Subject to VA eligibility requirements. Property insurance is required on all loans secured by property.