If you want to buy a house, chances are you will need a loan, and there are many loan types to choose from. If you are or were in the military, you will be eligible for a VA loan, but you might wonder if this is a better option than a conventional mortgage. Here are three things you can compare with these two popular types of mortgages to help you determine which is better for you:
There are three things to evaluate as you compare these loans, and the first is your credit score. Each loan type has certain requirements when it comes to credit scores, and conventional loans usually require higher scores. You may need to talk to a lender to find out what these are, but you can be certain that your credit score can affect this.
If your credit score is excellent, then you can compare the other factors of both types. If your score is not great, qualifying for a VA loan will be easier for you.
A second variable that can affect this decision is your debt-to-income (DTI) ratio. Again, the requirements are stricter when it comes to qualifying for a conventional loan than for a VA loan. If you do not have any debts, you will have a low DTI, which means you may have an easier time qualifying for a conventional loan. If you have debts, and if you have a lot of debts, you might be better offer sticking with a VA loan.
The other factor to consider is the amount of money you will need for your down payment, and there is a huge difference between these two loan types. When you get a VA loan, there is a chance you will not even need a down payment. If you do, the amount you need will be relatively low.
On the other hand, to get a conventional loan, you may need to come up with 20% to put down on the house. While this is not set in stone, you will need this amount if you want to avoid paying private mortgage insurance (PMI).
If you do not have a lot of money for your down payment, choosing a VA loan is probably the best option for your situation.
If you need a loan and find that a VA loan is right for you, talk to a mortgage lender like GRT VA LOAN today to find out how to get started with the application process.