10/13/2010 If you're a veteran, it's common knowledge that a VA home loan is a better choice than a conventional mortgage. Research backs this assumption. We've complied the top nine factors that make VA mortgages the best option for financing a home purchase.
1. VA mortgages don't require significantly high income. With conventional mortgages, the more money you make, the more you can borrow. This is not the case with VA home loans. You will need to prove that you have a steady income and reliable employment, but you don't have to be wealthy or even well off to prove your creditworthiness.
2. VA mortgages don't require a high credit score. A credit score of 620 is typically fine. This level would be unacceptable to a conventional lender.
3. You must prove one year with no delinquent payments. That's all. You don't need to worry about any credit mistakes that happened in your distant past. VA home loans are very forgiving in this regard.
4. VA mortgage don't require an impossibly low debt to income ratio. You'll need to prove a moderate debt to income ratio of just 41%.
5. VA mortgages require minimum residual income. In many cases, you don't need to prove any residual income at all if you meet the required debt to income ratio.
6. Low mortgage rates. Rates for VA home loans are not based directly upon credit score, as with other loans. As a result, you can get some of the lowest mortgage rates available with a VA mortgage.
7. No down payment requirement. VA mortgage are among the only mortgages that remain available to borrowers with no down payment. You can literally put no money down and walk away with the keys to your home.
8. No mortgage insurance requirement. Conventional mortgages require borrowers to pay for mortgage insurance if the down payment made is less than 20% of the total price of the home. Even an FHA mortgage will require this. VA home loans don't. You can put zero down and pay no mortgage insurance. This is a huge benefit.
9. Easy refinancing options. The VA offers an easy, low-cost refinancing option available only to VA borrowers. If you ever plan to refinance, a VA mortgage can make the process simple and cost effective.
