VA Loans & Conventional Loans: Which Is Best for First-Time Homebuyers?

by Maurice Kennedy, ® Realtor 03/19/2023

You have many choices for financing your first home purchase. If you're a U.S. veteran, it might seem like an easy decision to opt for a VA loan over a conventional loan. However, understanding the major differences between the two options will help you get the best financing for your needs. Here are the basic things first-time homebuyers should know:

Property Type Matters

The type of property you plan to buy is a major factor in whether you get a VA or conventional loan. VA loans can only be used for your primary residence. You can use a conventional loan to fund the purchase of almost any type of property, no matter the intended use. VA loans are an excellent choice for first-time homebuyers, but only if you're actually buying a home you'll use as your primary residence.

Down Payment Amounts

Down payment requirements differ between VA and conventional loans by a significant amount. VA loans come with the major benefit of not needing a down payment in most situations. Conventional loans almost always have down payments and some encourage spending more than the minimum requirement to get lower interest rates or other favorable terms.

Different Fees

Loans of any kind come with additional fees for various reasons. VA loans have a notable one-time fee to help the lender in case of default. Sometimes, the fee is combined with the total loan amount, which can make your interest and monthly payments. Conventional loans often charge additional fees for myriad reasons, so make sure to read the contract carefully and discuss the details with the lender beforehand.

Mortgage Insurance Requirements

Mortgage insurance is required when getting a conventional loan with a low interest rate. The insurance policy is there to protect the lender in the event you default on the loan. VA loans, by contrast, do not require mortgage insurance.

These are the major points of comparison between VA and conventional loans. If you're a first-time homebuyer and eligible to use your VA loan benefit, consider these differences carefully to make the best decision.

About the Author
Author

Maurice Kennedy, ® Realtor

Please explore the resources within my website, you will find everything you need to buy or sell a home as well as learn about the market value of homes. You can search for homes with detailed descriptions, photos, community and school information and so much more. I am ready to assist you with all of your real estate needs. My approach is customized for each client; my solutions are never one-size-fits-all! Please view this website as an introduction of my services and capabilities in this local area. Give me a call or send an email when you are ready to visit some homes or to schedule a free home buying or selling consultation. I look forward to working with you!