What’s the difference between a VA and conventional loan?

Published on Jul 01, 2021

What’s the difference between a VA and conventional loan?

Buying a home is an exciting time, but most new homeowners focus more on home shopping and less on loan research. With many types of mortgage loans out there, it’s important to understand which options are available and which product will give you the best benefits. If you or your spouse is an active military service member or veteran, you may qualify for a Department of Veterans Affairs (VA) loan, adding one more option to your list. But what’s the difference between VA and conventional loans, and how do you know which is right for you?

Conventional Loans

Conventional loans are, by far, the most popular type of mortgage for all homebuyers, comprising nearly 74% of all new home sales in the first quarter of 2018. These loans are secured through a lender or mortgage broker and generally require a 20% down payment and good credit for competitive interest rates. Traditional 15- and 30-year fixed rate or adjustable rate mortgages can be available.

​VA Loans

VA loans are flexible, government-backed loans that come with significant benefits, opening the doors of homeownership to veterans who might otherwise not qualify for a conventional loan. VA loans have certain advantages over conventional loans, especially if you don’t have great credit or money saved up for a down payment. Key benefits of a VA loan include: 

​How does a VA loan work?

The VA will guarantee a particular amount of the loan so that the lender experiences less risk in issuing the loan. The amount of the guarantee varies depending on a number of factors. This guarantee can be applied toward the traditional 20% down payment, so that qualifying veterans can secure loans with low or 0% down. A VA loan might be your best choice if you’re eligible and: 

What are the requirements for a VA Loan? 

VA loans are only available to service members or veterans who meet certain eligibility requirements. These include meeting the basic service requirements set by the VA, having a valid Certificate of Eligibility (COE) and satisfying the lender’s credit and income requirements. 

You may be eligible for a VA loan if: 

If you don’t meet any of these requirements, you may still be eligible – talk to one of our residential lending experts to find out.     

How to apply for a VA loan

If you’ve done your research and believe that a VA loan is right for you, here are four basic steps to start your application: 

A VA loan can be a great option for military service members, veterans, and their families, opening the door to the home of their dreams.  

If you’re interested in a VA Loan, you can get started by contacting one of our residential lending experts today. Take advantage of your military service with a mortgage that gets you home. Veterans who are first time home buyers can receive up to $250 off closing costs when you make automatic mortgage payments from a new or existing Valley Checking Account.