VA Loans & Conventional Loans: Which Is Best for First-Time Homebuyers?
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
Miriam McKinney
A true native to the Western North Carolina area with family roots dating back to 1810, I am a true ambassador for Western North Carolina with undergraduate degrees in education and music from Mars Hill University and an MBA from Western Carolina University. As a former teacher in the area my goal is to educate, whether a buyer or seller, by providing the most current, relevant information available and by giving expert guidance throughout. My professional goal is to exceed my client's expectations through a commitment to excellence with their success as the number one goal! Being a trusted advisor and creating lifelong relationships is an honor. The result is that I have been a top producing Realtor providing clients with successful outcomes for 20 years. I am licensed in both North and South Carolina.
Real Estate is my love and passion, and when I am not helping my clients achieve their real estate goals, I am working on my real estate investment portfolio. I am a seasoned investor who not only helps my clients buy and sell real estate, but I own investment real estate as well. My experience with different investments is extensive - from commercial investments, short-term rentals, single family homes and at times I am even the one with the power tools and getting my hands dirty, which is incredibly satisfying and rewarding!
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” Franklin D. Roosevelt
Giving back to the community and others is what this life is all about. I volunteer with Big Brother/Big Sisters, Conserving Carolina, travel abroad to help build houses for people without homes, give back to my profession as a past Secretary and Director for Land of the Sky Association of Realtors and serve on the Board of Equalization and Review for Buncombe County.
I love living in the mountains and enjoy the coast as well. This is the best of both worlds as North Carolina is an incredible state! I feel blessed to call the mountains of NC my home. One of my favorite activities is to hike with my Jack Russell, "Bella". Other favorites include cycling, mountain biking, kayaking, pilates, yoga, and paddle boarding. You will often find me participating in local and regional races. I love to travel the world but most of all I love coming home!
Experience matters. Real estate transactions are generally the largest transaction that most people ever do. I would be delighted to talk with you about your real estate goals and objectives and put my experience to work for you.
