7 surprising perks of VA loans

Lower interest rates, fewer fees

Let’s count the ways you'll save by financing with a VA loan.

  • No down payment on purchases up to $417,000 in most areas.
  • No mortgage insurance — even with no down payment.
  • Strict restrictions on the type and amount of closing costs.
  • Competitive interest rates, even if you have relatively poor credit and high debt.

How competitive? In most cases you'll pay the same interest rate as borrowers with a 760 credit score and a 20% down payment. Some lenders — Navy Federal Credit Union and USAA, for example — offer lower interest rates to VA borrowers than they do to prime, conventional fixed-rate borrowers.

The only financial drawback to a VA loan is what's called the funding fee, which can range from 1.5% to 3.3% of the amount you're borrowing.

The fee can be added to the loan so you won’t have to pay for it up front. If you have a service-connected disability, the funding fee is waived.