Whether you are a first-time homebuyer or a homebuyer who wants to refinance an existing loan, there are many options for you to choose from. Depending upon your needs and your finances, you can pick from Jumbo loans, FHA loans, Conventional loans, VA loans, or reverse mortgages. Each of these come with different terms and conditions and offer their own set of advantages. In this article, we are going to compare VA loans and Conventional mortgages so it’s easier for you to decide if either of these is a good option for you, or which one would be a better fit for your needs.
What are these two loan types?
The US Department of Veteran Affairs (VA) loans are only available to U.S. military service personnel, veterans, some surviving military spouses, and others who have served their country. These loans are issued by qualified lenders including Nationwide Home Loans (NHL).
Conventional home loans are available for virtually all qualified borrowers. Under this type of loan, about half are called "conforming" mortgages, because they conform to guidelines established by two government-sponsored enterprises- Fannie Mae and Freddie Mac. Loans that do not conform to these guidelines are called “non-conforming” home loans or jumbo mortgages.
With VA loans there is no required minimum down payment, so qualified borrowers can finance 100 percent of the purchase price of their home. Conforming conventional loans require a down payment of at least 3 percent for well-qualified borrowers as of January 2015.
This is not a requirement for VA loans. With a down payment of less than 20 percent on a conventional loan, the borrower must purchase mortgage insurance, usually in the form of monthly premiums. Mortgage insurance protects the lender in the event that a borrower defaults on the loan.
Although VA loans do not require mortgage insurance, a funding fee based on the borrower's type of service, the loan amount, type of loan and down payment, and other factors, is charged. This upfront funding fee can be financed into the loan, and in some cases, can be waived. The fee can be as low as 1.25 percent of the loan amount to as much as 3.3 percent. Any fees charged by the lender is also applicable. No funding fee is required for conventional loans, but any lender fees may still be applicable.
The interest rates for VA loans are generally lower than those for conventional loans.
Loan Amount Limits
There is no cap on the loan amount in case of VA loans. The maximum depends on the lender’s guidelines, the borrower’s down payment, and the location in which the house is purchased. The maximum loan amount is higher in more expensive markets. In the case of conventional loans, the conforming loans may have a limit of up to $625,500 for a single family home, but this amount also depends on the home’s location. Conventional loans with no loan limit are called jumbo loans.
The choice of loan you make depends on what suits your needs the best. If you qualify for both the VA and the conventional loan, you should consider both. If you qualify for just the conventional loan, you can pick from options under it that work best for you. In this regard, having a reputable lending company on your side can make the entire mortgage process easier and can also save you money.
Nationwide Home Loans is a leading, reputable mortgage lending firm in Florida. We are known for our quality service and ability to fit the best loan for each qualified borrower. At NHL lending, we are confident that we offer the best conventional home loan rates in Fort Lauderdale. We have worked with many different kinds of clients over the years, each with their own unique needs and financial situation.
Our unsurpassed service can be attested by our satisfied customers. Call us today at 888-995-6624 for a free no-obligation consultation and to find out how we can put our mortgage expertise to work for you. We offer a variety of different loan options, and with our flawless loan process, we can get your loan closed quickly and easily.