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VA Loan vs Conventional Loan - the BEST choice! - YouTube

Channel: Fidelis Property Group

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are you eligible to get a VA loan to buy

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a home and wondering if you should lose

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your eligibility or just get a

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conventional loan instead let's get into

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hey I'm Bethany Stalder of Fidelis

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Property Group we are a veteran owned

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real estate team in Northern Virginia

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helping military families near the

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Pentagon Fort Belvoir and Quantico so

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we've worked with a ton of clients who

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are wondering if they should use their

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VA eligibility or just get a

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conventional loan instead and save their

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eligibility for later there aren't major

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benefits to using a VA loan to buy a

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home but there are also some potential

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downsides as well and we're going to

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talk about all that today so let's start

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with the pros perón number one the VA

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loan typically does not require a down

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payment that's right 0% down if you

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haven't already used your VA eligibility

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to buy another property then a down

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payment is not a requirement for a VA

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loan if you have used your VA

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eligibility to buy another property you

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can still use it again to buy a home now

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the only difference is that you may have

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to put a little bit down payment on the

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loan in order to qualify on the other

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hand conventional loans not all but the

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vast majority do require some kind of

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down payment in order to qualify it

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doesn't have to be 20% that is a huge

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myth about buying a home but between

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five and ten percent minimum is very

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common for conventional loans if you

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would prefer to keep your cash or you

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don't currently have enough for a down

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payment a VA loan is going to be your

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best bet we have a client like that

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right now in this exact scenario he

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actually has tons of cash could easily

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qualify for a conventional loan if he

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needed to and yet he would really like

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to save some of that cash to do

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renovations to the property after moving

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so he's using his VA loan to buy the

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property he's gonna get to save some of

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his cash for later Pro number two

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interest rates in many cases you're

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going to get a better interest rate on a

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VA loan that I can

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now we're usually always talking about

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an eighth to a quarter point percent

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better difference here but if you're

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going to keep the house for a long time

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and interest rates are rising in other

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words you don't think you're going to be

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able to refinance into a lower rate in

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the foreseeable future that eighth to a

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quarter point difference could make a

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big difference in the long haul so if

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you're pretty qualifying for both a VA

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loan and a conventional loan be sure to

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check the interest rate on both you may

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be getting a better deal on the VA loan

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Pro number three more flexibility and

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getting qualified by this I mean the

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minimum credit score and the maximum

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debt to income ratio can often be more

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forgiving when qualify for a VA loan for

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example the debt to income ratio or DTI

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is a very important number when you're

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applying for a loan your DTI is the

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ratio of what you're paying to service

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your debt to pay off your debts versus

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what you're earning and it's important

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to both loan officers and underwriters

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in the process because it just tells

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them how much money you have to spend

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once you're done paying off your debt at

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the end of the month us how good a

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candidate will you be for a loan if your

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DTI is too high you won't get approved

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for a loan the VA sets a benchmark debt

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to income ratio of 41 percent but it's

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up to the individual lender to decide

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what that maximum ratio is going to be

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so that you may find a VA loan easier to

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qualify for depending on your

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circumstances all the said the VA loan

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sounds amazing

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seriously like why would you ever get

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another type of loan well you might not

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but here are some potential downsides to

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the VA loan first there is an additional

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cost to getting the VA loan which is the

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funding fee this is basically the cost

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of doing business with the VA and your

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funding fee varies depending on whether

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or not you've ever used

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via eligibility in the past and how much

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of the down payment you're putting down

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in this particular home I'll link to a

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handy chart below on our website that

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goes over the table of funding fees

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depending on those two factors for you

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now the funding fee is paid at closing

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but the good news is you can roll the

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funding fee into your total loan amount

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so you don't necessarily have to take

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that cash out of your pocket but just be

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sure to plan for it because it will

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become a part of your monthly payment at

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that point second the VA appraisal can

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be a tiny bit more strict than a

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conventional loan appraisal VA

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appraisers have to adhere to the VA

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guidelines which specify certain safety

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and livability factors that the

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appraisers have to look out for when

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they visit the home one of the most

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common ones that we see come up all the

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time is handrails so for example the VA

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guidelines specified that if there are

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more than two steps on the property

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those steps have to be accompanied by an

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adjacent handrail this is often the

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biggest issue that comes up but it comes

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up all the time here because our houses

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are older and the staircases weren't

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always built with railings at that time

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such a big deal right so just be aware

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of this and order your appraisal early

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in the purchasing process because if the

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lender does require any repairs as a

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result of the appraisal those repairs

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have to be completed and the appraiser

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has to go back out and verify that they

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were done before settlement can occur so

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order the appraisal early you'll know

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about these things early and you can get

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them fixed in plenty of time for closing

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lastly downside number three if you're

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looking to buy a home well in advance of

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moving to that location the VA loan

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might not be the best bet for you this

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is because the VA loan is intended to be

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used to buy a primary residence

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so the Viette guidelines specify that

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you have to move into that home within

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sixty days of purchasing it so if your

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orders don't have you showing up to your

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new duty station for another six months

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and you want to buy a home today then a

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conventional loan might actually be a

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better bet for you because there is no

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requirement where they can

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that you have to move into that home

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within a specified period of time you

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could buy the home today you could rent

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it out for six months until you get

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there

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no big deal the VA is a little bit more

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strict on that alternatively you can

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still use your VA but you're going to

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need to wait until you get closer to

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your arrival before you place an offer

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and close talk with your agent about

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your arrival timeline and they will help

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you backtrack the amount of time you

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need before you should be placing an

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offer and going under contract have you

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ever had to choose between using a VA

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loan and using a conventional loan

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what was the decision-making factor for

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you tell us about it in the comments for

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