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VA Home Loans vs. Conventional Home Loans

Despite a common belief that there are more hurdles to climb with a VA loan, it’s easily the most cost-effective way to purchase a home for military borrowers. As government-backed loans, there are countless built-in financial benefits and advantages associated with VA home loans, especially when compared to a conventional mortgage. So if you’re looking to purchase a home or condo in Florida and are currently weighing all your options, here is a quick look at the differences between a VA home loan and a conventional home loan:

VA Home Loans

Conventional Home Loans

Primary Purpose

Primary Residence Only Primary Home; Secondary Home;
Investment Property; Vacation Home

Down Payment

No Down Payment Required Varies; Usually 5% Minimum

Credit Score

No Requirment; 620 FICO Desired Minimum 620 FICO Score Typically Required

Mortgage Insurance

No Mortgage Insurance Required Required w/ Less Than 20% Down

Additional Fees?

Varies Based on Down Payment.
Zero Down = 2.15% - 2.4%
Lender Dependent

Primary Purpose: What Can I Buy With a VA Loan?

First off, if you’re looking to buy a vacation home or an investment property, a VA loan won’t be an option for that particular scenario. Instead, VA loans are only for buying a primary residence, so keep that in mind before applying.

Do I Need a Down Payment With a VA Loan?

One of the biggest advantages to a VA loan is that no down payment is required, whereas conventional loans usually require at least 3% down, and sometimes, even more, depending on your credit score, income level, and countless other facets.

Does My Credit Score Matter With a VA Loan?

While a good credit score is beneficial regardless of whether you’re looking to apply for a home loan, most VA lenders simply use a credit score as a benchmark, and no minimum score is required. But with that said, a 620 FICO score is still usually the standard and will make the borrowing process much easier if you’re at that level or higher.

Is Mortgage Insurance Required With a VA Loan?

Along with a zero down payment, the other primary advantage of a VA loan is that mortgage insurance isn’t required, unlike with a conventional loan with a down payment of less than 20%.

What Are Additional Fees Associated With a VA Loan?

Most VA home loans require borrowers to pay a funding fee, which helps offset the cost of loans that eventually default. The amount of each funding fee will vary and can often be lower should borrowers put something down. But typically, with zero money down, look for the funding fee to usually fall somewhere between 2.15% and 2.4%.