Buying Up or Downsizing? How Your VA Loan Benefit Can Help

While VA loans can be especially powerful for first-time homebuyers, this historic benefit program offers big-time benefits for more seasoned homeowners, too.

Whether you’re looking for a bigger house or wanting to downsize, you have lifelong access to the VA loan and its benefits.

Here’s a look at six ways it can help for your next purchase.

Buy with $0 Down

The most notable benefit of buying a home using a VA loan is the ability to purchase with no money down. Saving for a down payment is one of the biggest barriers hopeful homeowners face. But for eligible VA borrowers, it’s possible to forego the years of penny-pinching, bringing homeownership within reach for military families across the nation.

No More Loan Limits

The VA loan’s no-down payment benefit now extends to all loans for qualified buyers, regardless of purchase price. Before, Veterans could purchase with $0 down only up to their county’s loan limit.

Veterans who want to sell their current home and buy again can now borrow as much as a lender is willing to lend, all without the need for a down payment. That can be particularly powerful for Veterans purchasing in costlier real estate markets, or those who are looking to jump into a higher price range.

Rent the Old & Buy New

The VA loan isn’t a one-time benefit, and it’s even possible to have multiple VA loans at the same time. That means you could use a VA loan to buy a house, live in it for a time, and then rent it out and look to buy a new primary residence – with another VA loan.

Some limitations can come into play with this approach, including the need for a down payment in some cases. But this is a path for picking up an investment property if that’s a goal.

No Mortgage Insurance

VA loans don’t come with any kind of mortgage insurance. Conventional buyers typically need to pay for private mortgage insurance (PMI) unless they can put down 20 percent of the purchase price.

This extra monthly charge that helps mitigate the risks of lending to borrowers with less than 20 percent equity in their new home. For conventional borrowers, PMI typically falls off once you loan-to-value ratio reaches 80 percent. And FHA loans come with both upfront and annual forms of mortgage insurance, the latter of which buyers pay for the life of their loan.

Lowest Average Fixed Rate

Compared with other loan products, VA mortgages consistently offer the lowest average fixed interest rate on the market. Lower rates mean lower monthly payments and less total interest paid over the life of the loan. This is another unique feature of the VA loan program that can help VA buyers can stretch their dollar.

Check out today's VA loan rates.

Flexible Credit Guidelines

VA lending guidelines are more inclusive than other mortgage products. That’s partly because this is a hard-earned benefit meant to help expand access to homeownership.

Credit score benchmarks can vary by lender and other factors, but minimum score requirements for VA loans are typically lower than for conventional mortgages. VA loans also allow Veterans to bounce back faster into homeownership after derogatory credit events like bankruptcy and foreclosure.

If you’re an active duty service member, Veteran or surviving spouse, a VA home loan might be the best mortgage for you. Its competitive rates, inclusive income and credit requirements, and features like no money down and no PMI make the VA home loan an excellent choice.

A VA-approved lender can help you understand your eligibility and check to see if you qualify based on your income and credit scores.