Eligible veterans and service members have a choice, and the best loan is the one that costs you less over the years you will actually keep it. Here is a simple way to compare, without guessing.
What the VA says about VA-backed purchase loans
The VA describes its purchase loan as one that can offer better terms than a private-lender loan, and notes that nearly 90% of all VA-backed home loans are made without a down payment (that figure covers all VA loans, not only purchases). See the VA's loan types.
The five things to compare
- Down payment: how much cash goes in up front.
- The one-time fee: a VA funding fee (or none if you are exempt) versus conventional loan costs.
- Monthly mortgage insurance: conventional loans with a small down payment usually carry it; VA loans do not charge monthly mortgage insurance, though the funding fee applies.
- Interest rate: ask a lender for both quotes on the same day, and compare the APR as well.
- How long you will keep the loan, since a lower fee can matter less than a lower rate over 10 or 15 years, and the other way around.
Do the math
The VA Funding Fee Calculator puts the two side by side with the same price, tax and insurance, and the BAH Buying Power Calculator shows what a payment near your housing allowance could carry.
Ask both lenders
- For each loan: what is the rate, APR, fees and cash needed to close?
- Is the funding fee financed, and how does that change my payment?
- Which property types and conditions does each loan accept? See the VA appraisal.
- If I sell or move in a few years, what happens to the loan and can someone assume it?
Talk to a lender. Rates, loan programs and approvals come from lenders, not from websites or real estate agents. Talk to your own mortgage broker, or use our preferred lender, Point Mortgage Corporation (NMLS #231073), at (619) 475-4095. You are always free to choose any lender you like, and you can verify any lender’s license at nmlsconsumeraccess.org.
General information, not legal, tax or lending advice. Programs, rules and rates change, so confirm current details with the official source, your lender and your advisors.
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