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The 5 Key Benefits of VA Loans

The 5 Key Benefits of VA Loans

Even among the Korean community, there are individuals who have served in the U.S. military and are eligible for various benefits. One of the most significant advantages in the realm of real estate for active-duty military or veterans is the VA loan. Today, we'll explore the top 5 benefits of VA loans.

1. No Down Payment Required Yes, this is the most prominent advantage of VA loans. You can obtain a home loan without a down payment. However, it's essential to clarify that "No down payment" doesn't mean "no closing costs." You should be prepared for some costs at closing.

2. Less Stringent Loan Qualifications VA loan qualifications are generally less strict. To obtain a conventional mortgage, you typically need a credit score of 650 to 700. However, with a VA loan, a credit score of around 620 is often sufficient for approval.

3. No Mortgage Insurance Costs In traditional mortgages, if your down payment is less than 20% of the home purchase price, you're required to pay mortgage insurance premiums. These premiums can be a substantial amount. For example, if you have a loan of around $150,000, you might end up paying over $100 per month in insurance premiums. Over the years, this can add up significantly. With VA loans, you don't need to worry about this expense.

4. Lower Closing Costs As mentioned earlier, closing costs are necessary. VA loans have regulations that limit the lender's ability to charge the borrower more than 1% of the loan amount for origination fees and underwriting fees. Furthermore, VA loans may allow you to include the closing costs in the total loan amount. So, if you're purchasing a $480,000 home and have $10,000 in closing costs, you can secure a loan for $490,000.

5. Extra Assistance with Appraisal This aspect can also apply to traditional mortgage loans, depending on the lender you work with. When the appraised value of a home is lower than the purchase price, someone must make up the difference, or a new appraisal must be obtained. Failure to resolve this issue can lead to loan approval problems and contract cancellations. With VA loans, if such a situation arises, the VA appraiser notifies the buyer and lender before issuing the final report, providing a 48-hour window for additional information submission. During this period, the buyer, seller, and lender can provide additional information to adjust the home's appraisal value.

Today, we've explored the top 5 advantages of VA loans. If you have any questions, feel free to reach out, and we'll be back with more informative articles in the future.

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