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va loan vs conventional loan

Veterans and people who are currently in the military can get a special loan called a VA loan to help them buy a home. However standard loans are still a popular choice for many people who want to buy a home. We’ll talk about the main differences between VA loans and regular loans in this blog post. This will help you choose the loan type that best fits your needs.

You may like to read our blog The Debt Snowball Method: Guide to Tackling Your Debt

What is a VA Loan?

There is a home loan called a VA loan that is backed by the U.S. Department of Veterans Affairs (VA). Veterans, active-duty military members, and their surviving wives can get a VA loan to help them reach their goal of owning a home. Some of the best things about a VA loan are:

1. No down payment required: One of the most significant advantages of a VA loan is that you can finance 100% of the home’s purchase price, meaning you don’t need to put any money down.

2. Lower interest rates: VA loans often offer lower interest rates compared to conventional loans, which can result in substantial savings over the life of the loan.

3. No private mortgage insurance (PMI): Unlike conventional loans, VA loans don’t require PMI, even if you don’t make a down payment. This can save you hundreds of dollars each month.

4. More lenient credit score requirements: VA loans typically have more relaxed credit score requirements compared to conventional loans, making it easier for veterans and military members to qualify.

To be eligible for a VA loan, you must meet certain service requirements, such as serving a minimum period of active duty or being the surviving spouse of a veteran who died in the line of duty. You’ll also need to obtain a Certificate of Eligibility (COE) from the VA to prove your eligibility.

What is a Conventional Loan?

A conventional loan is a home loan that is not backed by or protected by the federal government. Loans like these are given by private lenders like banks and mortgage firms. There are two types of conventional loans: conforming loans and non-conforming loans.

Conforming loans follow the rules set by Fannie Mae and Freddie Mac, two companies backed by the government that buy mortgages from lenders. Jumbo loans and other non-conforming loans go beyond these limits.

The following things are usually true of conventional loans:

1. Require Down Payment: Conventional loans usually need a down payment of at least 3% to 20% of the buying price. The exact amount needed depends on the lender and the borrower’s finances.

2. Private mortgage insurance (PMI): If your down payment is less than 20%, you’ll probably have to pay PMI. This saves the lender in case you don’t pay.

3. Higher credit score requirements: Most lenders prefer a credit score of 620 or higher for conventional loans, while most lenders prefer a credit score of 620 or higher for VA loans.

4. A little higher interest rates: Generally, interest rates on conventional loans are a little higher than those on VA loans, but this can change based on the borrower’s finances and the state of the market.

Key Differences Between VA Loans and Conventional Loans

Now that we know what VA loans and standard loans are and how they work, let’s look at the main differences between them:

1. Eligibility: Veterans, active-duty military members, and their living spouses are the only people who can get VA loans. For conventional loans, on the other hand, anyone who meets the lender’s standards can get one.

2. Down Payment: VA loans can finance the whole loan, so there is no need for a down payment. For conventional loans, you usually need to put down at least 3% to 20% of the price of the house.

3. Mortgage insurance: VA loans don’t need PMI, no matter how much of a down payment you make. If the down payment is less than 20% of the price of the house, conventional loans need PMI.

4. Interest Rates: VA loans usually have lower interest rates than regular loans. This can save you a lot of money over the loan’s life.

5. Loan Limits: There are no loan limits for VA loans, but the VA will only take on so much debt. Loan amounts for conventional loans are different in each county and depend on whether the loan is regular or non-conforming.

6. Closing costs: With a VA loan, the seller can pay up to 4% of the loan amount in closing costs. With a standard loan, the seller can only contribute up to 3%.

7. Prepayment Fees: VA loans don’t charge fees for paying off the loan early, so you can do that without any extra charges. Depending on the seller and the terms of the loan, some conventional loans may charge fees for paying them off early.

How to Choose Between a Conventional Loan and a VA Loan?

In the end, your situation and financial goals will determine whether you should get a VA loan or a regular loan. If you qualify for a VA loan and want to avoid paying PMI, there is no need for a down payment. A VA loan may be the best option for you.

A standard loan may be better for you if you have good credit, can make a down payment, and want more choices in loan amounts and types of property.

It’s important to weigh the pros and cons of each loan type and talk to a mortgage expert who can help you figure out what your best choices are based on your unique situation before making a choice.


Understanding the differences between VA and conventional loans is essential for veterans and active-duty military members looking to buy a home. While VA loans offer unique benefits like no down payment and lower interest rates, conventional loans may be a better fit for some borrowers depending on their financial situation and homeownership goals.

By carefully evaluating your options and seeking guidance from a mortgage professional, you can decide which loan type best aligns with your needs. And if you’re struggling with debt, remember that professional debt settlement services from reputable companies like MDR Financial are available to help you regain control of your finances and achieve long-term financial stability.

Don’t let debt hold you back from achieving your dreams of homeownership and financial freedom. Take action today by exploring your home loan options and seeking the expert debt settlement services of MDR Financial.


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