When considering the different types of loans for military, law enforcement, firefighters, or first responders (retired or serving), many find themselves arguing whether they should go for a VA loan or a regular mortgage loan; i.e., conventional loan.
There are certain advantages VA loans offer and therefore might seem like the best choice; but that isn’t always the case. There are numerous factors to consider, as discussed below.
These loans are there to serve those who have served the country, i.e., serving or retired military personnel, firefighters, law enforcement officers, first responders, and more. The program has the U.S. Department of Veterans Affairs backing it up to help them buy their dream home.
These loans are very lenient, as you can see from the table below. The problem with VA loans is that some benefits are often overstated, such as the no-minimum credit store or debt-to-income ratio. Furthermore, VA loans are for primary residences only.
These are loans that have no government backing, i.e., aren’t insured or guaranteed by federal authorities, but by private lenders. Buyers usually have to pay the insurance fee for conventional loans.
Conventional loans usually have higher interest rates or down payment (or both), which make initial acquisition all the more difficult.
Here is a table to compare the two:
|VA Loans||Conventional Loans|
|Down Payment||Optional||Required (at least 3%)|
|Eligibility||Need to be a government employee||Determined by lenders. Anyone can take conventional loans, in essence.|
|Property Type||Primary home ONLY||Primary, secondary, or investment properties|
|Loan Fees||VA Loan funding fee, origination charge, and more; charged upfront||Determined by the lender|
|Insurance||No insurance required||Required where down payment is less than 20%|
|Minimum Debt-to-Income Ratio||None||Smaller than 36%|
|Minimum Credit Score||No requirement as suggested by USDVA||620 FICO|
To learn more about VA loans or other mortgages in Las Vegas to help you buy luxury real estate, we recommend you get in touch with us today.
Disclaimer: There are numerous factors to consider in every investment, including real estate. The information provided above is just a matter of opinion and can change with time. It shouldn’t be construedas legal or tax advice; neither does the report constitute a financial promotion or investment advice. It is general information and before making any such decision, you should seek out licensed professionals and see all ends.