Are you stuck? Wondering what is best for you while availing of the loan? Don’t worry; the Florida mortgage company has your back. Here is an in-depth comparison of VA loans vs. Conventional Loans to help you make the best decision for yourself! Sometimes, VA loans might be best for the vast majority of people since they have lower interest rates and don’t require mortgage insurance. 

However, in some cases, like buying a home that is more expensive than the VA loan limit or if you have less-than-stellar credit, a conventional loan might be a better option. Let’s take a look at the specifics of each type of loan:

VA Loans or Conventional Loan? What are the Comparing Factors?

When it comes to mortgages, there are many options available to potential homeowners. Two of the most common types of mortgages are VA loans and conventional loans. Each has its benefits and drawbacks, so it can be challenging to decide the best option for you.

Florida VA loans are an excellent option for military members and veterans because they don’t require a down payment or private mortgage insurance. As a result, you can purchase your dream home without making a down payment and have a higher debt to income ratio. In addition, the interest rates are also usually lower than conventional loan interest rates. Hence, you can get the privilege of affordable monthly payments, which can save you a lot of money over the life of your loan.

On the contrary, conventional loans are available to anyone, regardless of military status, and may require a down payment. However, conventional loans require private mortgage insurance, which can be expensive. The interest rates on conventional loans are also variable, which means they can increase your monthly payment.

Comparison Chart

VA loans Conventional loans
Available to veterans and active military members Available to anyone, regardless of military status
No private mortgage insurance is required. Requires private mortgage insurance, which can be pricey
Only primary houses are eligible for VA loans. Primary houses, second homes, or investment properties are eligible for conventional loans.
A minimum credit score ranging between 580-620 Minimum credit score around 620
No down payment Down payment around 3%
Lower interest rates Variable interest rates can 

increase your monthly payment

Pros and Cons of VA loans

VA loans are backed by the Department of Veterans Affairs and offer many benefits over conventional mortgages. These include no down payment requirements, lenient credit score requirements, and no private mortgage insurance premiums.

However, VA loans can be more challenging to get approved for than conventional mortgages. Borrowers must meet stringent service requirements and may be subject to a funding fee.

To be eligible to avail of VA loans, you need fulfilling one of the following requirements:

  • Be a veteran who has served 90 consecutive days of active service during wartime.
  • Be a veteran who has served 181 days of active service during peacetime.
  • Have served for 6 years in the national guard or selected reserves, 
  • Be the spouse of a veteran who died in the line of duty or due to a service-connected disability, and you haven’t remarried.

Pros and Cons of Conventional Loans

Conventional mortgages are not backed by the government but offer more flexible qualification requirements and lower interest rates. For example, down payments can be as low as 3%.

However, conventional mortgages can be more challenging to get approved for than VA loans. Borrowers must typically have a higher credit score and provide a larger down payment.

The Biggest Pitfall – Sellers Conventional loans over VA Loans!

Veteran home buyers face this one big challenge: sellers tend to favor conventional loans over VA loans.

“As per today’s economy, there are multiple offers for sellers to concentrate, sellers may go with conventional loans in Florida over VA financing. VA loans can take longer to close due to the additional paperwork and verification requirements.” 

Also, it is essential for veteran buyers to make their offer stand out by waiving their right to a home inspection or doing something else that shows they are serious about buying the property.

Still, VA loans typically offer better deals for buyers (especially first–time buyers) because of the lack of a down payment and mortgage insurance. The only thing you need to focus on is finding the right real estate agent and making sure they know how VA loans work.

The Bottom Line

So, which loan is best for you? That depends on your circumstances. The VA loan might be the best option if you’re a veteran or active-duty military personnel. But if you’re not, a conventional loan might be a better choice. As always, it’s essential to consult with a qualified mortgage lender in Florida to find out which loan is right for you.

Happy house hunting!