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First-Time Home Buyers And The VA Home Loan

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A great way for a Veteran to get into their first home is using their VA Home Loan Benefit. The qualifications for Veterans that are first-time home buyers using the VA loan program are simple. If you’re eligible it should be considered as one of your first and best options. The VA Home Loan Guaranty allows Veterans to obtain a loan without a down payment or mortgage insurance premiums.

For the Veteran that finds it challenging to come up with a large sum of money for a down payment when buying a home, having the option of using a loan that requires no-money down could save quite a bit. Some service members may be concerned about the commitment involved in buying a house since it’s such a major purchase, but these days buying a home doesn’t mean it has to be a permanent forever home. Here are a handful of great reasons for first-time home buyers to consider using the VA Loan.


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Lower Qualifying Credit Scores

Some of our Veterans are still in the process of trying to build a strong credit history and might not qualify for an affordable interest rate on a conventional loan. VA loans are backed by the U.S. government so qualifying at a competitive rate is a lot easier. This allows Veterans to have a chance at owning a piece of the land they fought to defend when they might not have had the chance otherwise. Credit scores averaging around 600 can still be considered favorable for first-time home buyers using the VA program, although higher the score, the better the interest rate.

No Down Payment Required

Saving for a home might take a while without the use of the VA Home Loan benefit. Many of the conventional loan programs require anywhere from 3% to 20% cash as a down payment. Since the VA loan is backed by the Department of Veterans Affairs loan guaranty program, the Veteran borrower can get into a home without a minimum down payment. In the case where the price of the home is outside of the VA appraised value, the borrower cannot finance the overage and must pay the difference in value with cash before closing the loan.

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No Private Mortgage Insurance (PMI)

Most conventional loan programs require a 20% down payment on the loan to protect the lender against loss. If the borrower puts anything less than that amount, there will be an additional monthly premium, called the Private Mortgage Insurance or PMI. The amount of the PMI varies and depends on the amount of the loan, the amount of down payment, as well as credit scores. If the borrower is using the VA Loan program, there’s no need for the additional payment since it is a VA Guaranteed loan, meaning the government insures 25% of the loan in the case of the borrower defaulting on the loan.

Lower Funding Fees For A First-Time Home Buyers

In order to offset some of the costs involved with the VA loan program, the Department of Veteran Affairs collects a mandatory funding fee. This funding fees ensures the program continues. It’s a requirement with every loan and is the service member’s responsibility. Purple heart recipients and certain Veterans that are receiving or are eligible to receive VA compensation for a service-connected medical issue, are exempt from paying the fee. Certain surviving spouses of Veterans are also exempt. For first-time home buyers using the VA home loan, the fees are the lowest on your very first loan, this could possibly save a significant amount of money. Additionally, the funding fee can be rolled into the loan amount, allowing the Veteran to purchase a home with little to no cash out of pocket.


For first-time home buyers using a VA Home Loan, the overall cost of buying a home is significantly better for them than the average home buyer. Combining the benefits of having a no money-down loan, no PMI, low funding fees, and the ease of qualifying without a perfect FICO score, makes using the VA Home Loan the most cost-effective way to purchase a home.

Buying a home is a major milestone in life and for the first-time home buyers using the VA Home Loan, it may seem overwhelming and complicated. Finding a trusted source to help you navigate along the path of homeownership is key. Start by connecting with a VA-Approved lender that understands and specializes in the VA Home Loan process. Aligned Mortgage is the #1 VA Home Loan lender in Hawaii and our Loan Officers are here to answer all questions regarding the VA Home Loan benefit.

Would You Like to Learn More About The VA Home Loan Benefit?

Aligned Mortgage offers a FREE VA Home Loan Benefit Seminar every month, explaining the power of the VA benefit. Come join Hawaii’s #1 VA Lender and learn how to use your BAH to build your legacy. Contact us today at 808.677.5626.

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