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Why Use a VA-Backed Loan?

VA home loans have several benefits for qualifying consumers.

First and foremost, the greatest benefit to having a VA-backed loan is the security it offers your lender. In the event of the loan falling through, the VA will bay pack a portion of the loan to the lender. This ‘VA guarantee’ of the debt allows the lender much more flexibility in dealing with you. While most mortgage applications are assigned interest rates, down payment requirements, and much more based on very strict guidelines – lenders find they have much more freedom with VA-backed loans. The certainty of the government backing the mortgage allows the lender to, potentially, avoid a down payment altogether or offer a better interest rate than would otherwise be available.

Additionally, unlike many government-backed loan programs, a VA guaranteed loan does not require a minimum credit score. This doesn’t mean that the lender themselves won’t require one, but instead means that the government doesn’t require a minimum credit score in order for the loan to be backed by the VA. Thus, a veteran or service-member with a less-than-ideal credit score may be able to qualify for a mortgage using the VA’s backing that they wouldn’t be able to obtain otherwise.

Lastly, while VA-backed loans do require a funding fee to be paid, there are exemptions to even this minor downside. Specifically, veteran’s rated with a 10% or higher service-connected disability are exempted from the funding fee.

In short: why should a service-member or veteran consider using a VA-backed loan?

Simple: because it can help them obtain a more favorable mortgage than they might be offered otherwise, and it is a benefit that qualifying veterans and service-members earned in their service.

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