VA loans eliminate Private Mortgage Insurance (PMI)
With conventional loans through the Fannie Mae, PMI is additional insurance that lenders require for most home buyers who obtain loans that are more than 80% of their new home’s value. In other words, buyers with less than a 20% down payment are normally required to pay PMI. However, qualifying for a VA loan signifies a certain level of credibility and the VA already guarantees a portion of your loan to the bank. Thus, the VA eliminates monthly private mortgage insurance (PMI) expenses, which can save you a lot of money. There is a VA funding fee that maybe be financed into your loan at closing however.
The fact that VA loans do not have monthly PMI is one of the major reasons Oregon veterans use the VA home loan when purchasing property. VA loans allow Oregon veterans to borrow with no down payment, up to 103.15% of the value of a home, and save anywhere from $80-$300 a month by not having to pay monthly PMI.
Since there is no monthly PMI, more of the mortgage payment goes directly towards qualifying for the loan amount. This allows for larger loans, (and nicer homes) for the same monthly payment as a conventional loan.
In today’s tough economy, the VA home loan program helps make homeownership possible for the brave Oregonians who served our country.