If i have a VA loan...because it's 0% down does that mean i pay more per month??

How does a VA loan help? Do I have to pay more per month because it's 0% down?
  • October 13 2009 - Mechanicsville
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Answers (8)

Not at all...although VA rates for us tend to be about an 1/8th higher than a Fannie loan. You will have a little higher cost in closing but there is no monthly PMI involved like a Fannie Mae loan with minimum down. VA Loans are great if you qualify
  • October 21 2009
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thank you everyone. you've all been so helpful

  • October 21 2009
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Profile picture for Keane Ng

It depends, but if you're comparing a VA loan with 0% down versus one that has a down payment, then absolutely "yes."

One, your loan is smaller.  Smaller loan, smaller payment. 

Two, the funding fee VA charges is less when you put money down.  The Funding Fee is financed in the loan, which in turn also makes your loan larger, thus payments are more.

However, the premiums you pay for a VA loan are minimal compared to other options with little to no money down.  If you're not putting 20% down with very high credit, it's probably your best option.

  • October 21 2009
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Short answer, the more you borrow (on any loan type) the more you pay.  VA is one of the few options that allows 0% down and is popular for that reason.  VA is not a loan for crappy credit (as someone stated earlier).

The rate on a VA loan is generally about the same as an FHA loan and both are lower than a comparable 5% down conventional loan.  VA does charge a large fundinig fee if you are not exempt.  This fee is added to the loan and doesn't need to be paid cash at closing.  There is no monthly mortgage fee so in most cases the VA loan payment is LOWER than FHA or conventional quotes AND less money out of your pocket.

The real risk then lies in the fact that you will have no equity in the home, so if you were to have to sell in the near future OR if values continued to drop in your area, you could be in an upside-down (owe more than the home is worth) situation.
  • October 21 2009
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the only reason you should do VA is if you need to do a 100% or if you have crappy credit. if you can put some money down, put 5% down and do a conventional loan.
VA and FHA both have outragious fees. they are just loaded into the loan or rate, just depends on how the loan officer wants to hide them. so always do conventional if you can.
  • October 19 2009
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Hi juicyred921:  The short answer is yes, if your VA loan is 100% of the purchase price, and you are comparing it to an FHA loan with 3.5% down, or an agency loan with 5-10% down, then it is likely your VA monthly payment will be a bit higher. However, since rates vary from loan product to loan product, and VA has no monthly MI, a quick analysis of all three options would be able to make these differences very clear. Pick a lender through the Zillow Quote request, and have them do an analysis for you to the penny. Hope this helps...Jim
  • October 14 2009
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A VA loan helps because you usually dont have to make a down payment, and there is no monthly mortgage insurance because you pay a funding fee upfront ( unless exempt ). If you make a down payment, then have your loan officer compare to FHA and conventional.
  • October 14 2009
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Profile picture for the_country_hick
It depends on interest rates. if you get both choices at 5% with no points the price is the same. Fees could change that.

But yes, you will pay more monthly than with a downpayment. The reason is simple. You have to pay each month what you did not take away with the downpayment you did not apply.

The biggest advantage ( as I recall) of a v.a. loan is that it does not require the downpayment. But the v.a. also insists on certain qualifications for the property to meet. So you are less likely to buy a bad house.

The best answers would be from a mortgage lender. Many offer V.A. and other loans.

At this point in time I would seriously consider watching the market for awhile. Look up things like shadow inventory, 7 million foreclosure to come, and the unemployment situation. Remember, effectively the $8,000 buyers bribe is dead. That should bring prices down. But for now they are higher than needed.

It appears that house prices should drop as foreclosures increase and jobs decrease. The other limiting factor is interest rates. They could go up. I recommend doing your research on this and then make a decision. I hate to see you pay 30% more than you need to.
  • October 13 2009
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