What is the advantage of a VA loan compared to a traditional mortgage?

As you’re shopping for a mortgage, it is important to understand all your options. Here are the differences between VA loan and a traditional mortgage you should know.

There are a lot of loan programs out there for you to choose from. But if you’re a veteran, an active duty service member, or a member of the National Guard or Reserves, you have a unique advantage that other homeowners and homebuyers don’t have: You’ve earned the right to apply for a VA mortgage.

As you’re shopping for a mortgage, it is important to understand all your options. Even if you qualify for a conventional loan, you should still consider a VA home loan, which may be a better option for you and your family.

Unlike many other mortgage loans, VA home loans allow 100% financing. For a home purchase, that means not a dollar out of your pocket for a down payment. Even if your credit scores aren’t perfect, you’re still welcome to apply.

1. Quick Facts


VA Loan

Conventional Loan

Maximum Financing for Refinance



Down Payment Requirement for Purchase



Mortgage Insurance

Not Applicable

Typically required for loans with less than 20% down

Property Type

Primary Residence

Primary Residence, Second Home, Investment Property

2. What is a VA Home Loan?

The VA home loan program is an exclusive benefit to veterans and servicemembers. It is not available to civilians. These loans make it easier for veterans to buy homes or refinance their existing mortgages. The program was first implemented to help returning World War II veterans purchase homes. Since then, the program has continued to help veterans and servicemembers finance their homes and achieve financial security.

Through this program, VA home loan lenders provide mortgages to borrowers, and the U.S. Department of Veterans Affairs guarantees a portion of the loan. Thanks to this powerful guarantee, lenders like NewDay USA can provide you with more favorable loan terms.

3. What is a Conventional Mortgage?

Conventional home loans are a category of mortgage products that are available to the general public. These loans are often harder to qualify for than VA loans or FHA loans. Most lenders have strict minimum credit score requirements for conventional mortgages. If you have less than perfect credit, you may still qualify for conventional loans, but you may be charged a higher interest rate, which will increase your monthly payment.

If you’re completing a conventional cash out refinance, you can typically only refinance up to 80% of your home’s value. If you’re buying a home, conventional loans usually require large down payments. If you’re unable to make a 20% down payment, you may have to pay costly private mortgage insurance every month. Unlike a VA loan, a conventional mortgage can be used to purchase or refinance a second home, a vacation home, or an investment property, as well as a primary residence.

4. VA Loan Benefits - No Minimum Credit Score, No Private Mortgage Insurance, and More

A VA mortgage has several important advantages over a conventional loan. These unique benefits can give you more cash out, save you money, and make homeownership even more attainable.

  • If you are a veteran homeowner looking to get cash, you can refinance up to 100% of your home’s value, which means more cash for your family and home.
  • If you are a veteran looking to buy a home, you can buy a new home with 0% down - no down payment coming out of your pocket.
  • No PMI (private mortgage insurance) required. This will save you money every month.
  • VA loans are assumable. This means that if you decide to move on, another qualified person can take over your existing mortgage, making for an easier closing process.
  • The VA loan program does not have a minimum credit score requirement. No matter your credit score, you are welcome to apply.

5. Why NewDay USA is Different?

NewDay USA created Operation Home to help more veterans and service members achieve the American Dream of homeownership. NewDay USA not only helps you buy a home with no down payment, we also work with your seller and your realtor to help you reduce or even eliminate the out-of-pocket closing cost. With a conventional loan, you could be paying thousands of dollars in closing costs. Watch Operation Home stories and find out how NewDay USA helped veterans get their dream home.

6. Next Step

Veterans, it’s time to take advantage of your VA home loan benefit. Even if you have been turned down by your bank, give us a call. NewDay USA has been granted automatic authority by the VA and is committed to helping our nation’s heroes get the most out of their VA home loan benefit. Call 800-995-0374 or apply online 24/7.