But because VA loans are backed by the U.S. government, they are not as risky for lenders. The VA guarantees lenders that if a veteran defaults on a loan over $144,000, the VA will pay the lender up to 25% of the loan amount. Since the loan is partially guaranteed by the U.S. government, the standards veterans need to meet are not as strict as those applying for a conventional mortgage. Because the loan is guaranteed to be repaid, lenders often offer VA loan rates that are lower than conventional loan rates.
ADVANTAGES OF VA LOANS
One big advantage to a VA loan is that it can make home ownership possible to veterans who haven’t saved up a hefty downpayment.
No Down Payment
Most home loan programs require a down payment of 5, 10 or 20% of the purchase price, to be paid upfront in cash. With a VA loan, you can finance 100 percent of the purchase price, meaning a VA loan is a real no-money-down opportunity to buy a home. "Traditionally it is good faith deposit and amount depending on demographic is required by the seller with an executed contract". That can be appealing for younger veterans and first-time homebuyers because it can mean the difference between owning a home and building equity, or renting.
Lower closing costs
The VA also limits the amount lenders can charge in closing costs to VA loan applicants. This can make a VA loan more affordable than other types of loans. Saving thousands in closing
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