The Pros and Cons of a VA Home Loan

As a veteran or service member, you are entitled to a number of valuable benefits, such as a VA loan. These loans are an attractive option for those who are looking to purchase a home in the near future. While there certainly are many advantages to a VA loan, they also come with a few disadvantages.


  • No Down Payment
  • Today, the standard down payment when buying a house is around 20%, a sum of money that can certainly strain a budget. However, if you are fortunate enough to use a VA loan, one of the biggest advantages is that you do not need to pay a down payment. To receive this perk, the house that you purchase must not exceed the value of $417,000. The lack of a down payment makes it far easier to purchase the home of your dreams for you and your family.
  • No Private Mortgage Insurance (PMI)
  • With typical loans, interested homebuyers who cannot afford the 20% down payment are required to pay a PMI. However, as the recipient of a VA loan, the PMI requirement is also waived. This is just another way veterans can avoid additional fees and higher monthly costs, as most PMI’s have a monthly premium cost added.
  • No Prepayment Penalty
  • When you take out a home loan, the repayment schedule is usually fixed. In many cases, this means that you can be penalized for paying off your loan early. However, with a VA loan, the terms are different. Those who take out VA loans do not need to pay a penalty fee if they pay their loan off early.


  • Funding Fee
  • While VA loans have a number of great advantages, there are some disadvantages too. The first disadvantage is that there is a VA funding fee. This fee is charged by the VA, and it is what helps keep the VA office running. Your VA funding fee may vary depending on your home’s purchase price, loan type, and additional details.
  • Sellers can be Difficult
  • One major disadvantage of taking out a VA loan is that sellers can be hesitant in dealing with VA loan recipients. The reason for this is that there is a lot of misunderstanding and hesitation on the part of the sellers regarding these types of loans. The best way to deal with this issue is to refer them to the VA office or have your agent explain the terms to them.

Overall, VA loans are an excellent way to achieve your dreams of owning a home. As a service member or military veteran, these loans enable you to purchase a home with fewer added costs. While there are the disadvantages of a funding fee and possible seller misunderstandings, those are minor and are outweighed by the advantages.

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Posted on May 18, 2023