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Bottom Line Up Front 

  • No down payment required, and better rates than traditional loans
  • No early exit fee if you sell your home before your mortgage is paid off

When it comes to finding a home, getting the best possible mortgage sets you up for success. For those who are eligible, a VA (Veteran’s Administration) mortgage loan offers a number of benefits such as no minimum credit score and no down payment required. A VA loan may be the best solution to meet your financial needs during the home-buying process. Here are some of the biggest advantages of VA loans and ways they can benefit you:

  1. No money down. Coming up with a 5 percent to 20 percent down payment is a barrier for many homebuyers. For a $200,000 home, a standard 20 percent down payment is $40,000. That’s a lot of money for most families to save up. Because VA loans eliminate the down payment requirement, you can get into a home sooner. With a VA loan, as long as the purchase price doesn’t exceed the appraised value of the home, no down payment is required.1
  2. No private mortgage insurance (PMI). With traditional loans, if you’re financing more than 80 percent of a home’s appraised value, you’ll most likely be required to pay PMI every month. PMI protects the lender if you default on the loan. This can cost many borrowers an extra $100 to $200 a month. VA loans don’t require PMI, even when taking out a loan for the entire appraised value of a house. Without PMI, VA loans make buying a home more affordable compared with other loans.
  3. Strict limits on closing costs. Closing costs for traditional mortgage loans can add up quickly, but with a VA loan, strict limits are imposed on which closing costs are allowed.2 Having limits on closing costs ensures you aren’t paying too much at closing, so that money can be used for something else.
  4. Lower interest rates. Home loan interest rates can increase your monthly mortgage payment, and paying all that interest adds up over the years. Because VA mortgages are partially guaranteed by the VA, lenders are encouraged to offer more favorable terms than conventional loans. This often translates into lower interest rates for VA loans compared with conventional mortgage rates.
  5. Potentially lower qualifying minimum credit score. The VA doesn’t set a minimum credit score requirement for a VA loan. However, many VA lenders have guidelines for minimum credit scores for qualification. Your lender may look past your credit score to see your unique financial situation to help get you the best VA loan possible. Lenders consider many factors, like employment, income and financial history.
  6. No prepayment penalty. Some mortgages may penalize you for paying off your loan early, but with a VA loan, there’s no penalty for paying ahead of schedule.
    Another plus: VA loans don’t have an early exit fee if you decide to sell your home before the mortgage is paid off. In addition to not having prepayment or early exit fees, there are no restrictions about refinancing a VA loan.

Ready to get started on your path to homeownership? Get preapproved for a mortgage that fits your needs and goals. Navy Federal is here to help you with your homeownership journey.


1 Product features subject to approval. 100% financing loans may include an additional funding fee, which may be financed up to the maximum loan amount. Available for purchase loans only.
2 Navy Federal VA loans are subject to a 1% origination fee.


This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.