When is it a good idea to use your VA benefits?

5 min read   •   Apr 10th, 2020 - 12:17

When is it a good idea to use your VA benefits?

Nathan Kowarsky

Written by

Nathan Kowarsky

If you’re a veteran looking to buy a home or refinance a mortgage, you should consider a VA mortgage as opposed to a conventional financing that often has higher interest rates and could require Private Mortgage Insurance (PMI).


The Veterans Affairs loan program assists veterans, eligible surviving spouses, and active duty service members to become homeowners. Without the VA loan program, it could be a hassle for veterans to purchase a home. But, VA home loans remove many of the stumbling blocks that veterans often face, making it significantly easier for them to obtain a home loan. As clearly laid out by the U.S. Department of Veterans Affairs, VA mortgages have:

  • Relaxed credit requirements

  • Lower closing costs

  • No pre-payment penalties

  • No PMI requirements

For those already with a mortgage, the VA also offers great refinancing options. A cash-out refinance usually comes with generous terms and allows veterans to use the value of their homes to receive cash—using it to pay down debts or to finance other goals. The VA Interest Rate Reduction Refinance Loan (IRRRL) allows veterans to benefit by potentially saving tens of thousands of dollars in interest.

In the end, all VA loans give veterans generous terms and are almost always more cost-effective than other types of loans including conventional, FHA, or USDA mortgages.

When Is It a Good Idea to Use Your VA Loan Benefits?

        1. You don’t want to pay for private mortgage insurance

PMI isn't only costly to set up; PMI also adds hundreds of dollars to what you’ll need to pay every single month. Thankfully, veterans don’t need to brood over Private Mortgage Insurance as a result of the entitlement, which often adds up to 20% of the home’s value.

You do need to pay a funding fee in advance though; and it can be as high as 3.3% or as low as 1.25% of the mortgage amount based on your service level and loan details.

        2. You don’t have savings for a down payment

With conventional loans, a significant portion of the cost of the home is required upfront--if you’re a veteran looking to buy a home without a down payment, you can consider using your VA home loan benefits. With a VA loan, you can buy a home without a down payment. And this means that you can start building equity quickly.

       3. You have a poor credit history

Yes, foreclosure or bankruptcy can stay on your credit report for years. However, this doesn't mean you must wait a while before you can use your VA home loan benefits. In actuality, you can become eligible 2 years after the foreclosure date.

Essentially, you can use your VA loans benefit even though you have a bad credit history. Typically, you only need a 620 credit score to qualify.

        4. You are disabled

If you qualify to receive recompense for a service-connected disability, you should even more strongly consider a VA loan. Normally, VA loans do require the upfront “VA Funding Fee.” Qualified applicants with a military-related disability are entirely excluded from having to pay this fee.

       5. You want low closing costs

The closing costs on a VA mortgage are often lower compared to conventional financing. Why? Some closing costs are regulated. Besides, the seller can pay back about 4 percent of your loan so you can finance closing fees and expenses.

The Bottom Line

Ultimately, most borrowers who qualify for a VA loan should consider using their benefits. From low interest rates and lenient credit requirements to no down payments and PMI, the benefits of VA Mortgages bear repeating.

As you begin the new home or refinancing process and start reviewing options, make sure you speak with a Clear Mortgage Capital VA loan expert.

At Clear Mortgage Capital, we understand that you have specific goals, concerns, and expectations. Our team is very experienced, knows what the best options are, and has access to provide you with those options. We are committed to understanding and meeting your unique needs, guiding you to the right option for you and your family.

If you are a veteran, thank you for your service and your sacrifice—we would be honoured to work with you!

Nathan Kowarsky

Nathan Kowarsky

CEO NMLS: 294599

As CEO, Nathan understands the needs of his clients, and creates a plan to meet them. It’s that intuitive sense – intersecting with his deep expertise – that drives results.

During the course of his career, Nathan has funded more than 7,000 home loans. It is based on that knowledge that he walks clients through each step of the process, and trains his staff in the same standards and methodologies.

Nathan’s philosophy is straightforward: professionalism and competency require integrity and honesty. Those principles infuse the leadership he brings to Clear Mortgage Capital (CMC). Positioned as a subject matter expert, and acknowledged as an industry leader, Nathan understands that growth is not sustainable without delivering quality service and actively shaping CMC’s corporate culture.

In May 2022, Nathan received the 2022 Visionary Innovation award from the Association of Independent Mortgage Experts.   Following suit, in October 2022, LA Times awarded Nathan as 2022 OC Visionary in the finance/banking category.   Nathan has also been featured on ABC7 LA as a subject matter expert, commenting on recent market conditions. 

Prior to founding CMC, Nathan spent four years as President of E Capital Mortgage. During that time he oversaw over 700% growth. Previously, Nathan served as a senior mortgage banker, loan officer, and trainer for several industry leaders, including LendingTree, Nationstar Mortgage (now Mr. Cooper), and loanDepot. He holds a Bachelor’s Degree in Business Administration and is affiliated with the California Bureau of Real Estate and Orange County Association of Realtors. Recently, Scotsman Guide ranked Nathan among the Top 10 mortgage lenders in Irvine, California.

See Nathan's reviews here: https://www.zillow.com/lender-profile/nkowarsky/

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