Should I use VA home loan when I have money to put down??

[Jordon Nichols]

Hello everyone,

I'm a new investor currently looking for my first property. I'm looking into the best financing option for me. I will be buying a 2-4 unit in a suburban market between 100-250 K. I am eligible for the VA Home Loan and have planned to use this but the allure of a VA Home Loan to people is the 0% down. I won't be putting 0% down as I want to cash flow and don't think 0% down is a good idea for a safe investment. That brings up the question of whether I should just stick to the 100-150 k range and put 20% down on a conventional mortgage because I have roughly 30 grand to put down on the property. Or should I just save some of that down payment for things like upgrades and get the VA loan with less money down? I know there are fees associated with the VA loan like mortgage insurance and a percentage rate mortgage fee but I will qualify for a much higher amount through VA.

Any insight would be helpful. Thanks!

[Chris Mason]

Originally posted by @Jordon Nichols:

Hello everyone,

I'm a new investor currently looking for my first property. I'm looking into the best financing option for me. I will be buying a 2-4 unit in a suburban market between 100-250 K. I am eligible for the VA Home Loan and have planned to use this but the allure of a VA Home Loan to people is the 0% down. I won't be putting 0% down as I want to cash flow and don't think 0% down is a good idea for a safe investment. That brings up the question of whether I should just stick to the 100-150 k range and put 20% down on a conventional mortgage because I have roughly 30 grand to put down on the property. Or should I just save some of that down payment for things like upgrades and get the VA loan with less money down? I know there are fees associated with the VA loan like mortgage insurance and a percentage rate mortgage fee but I will qualify for a much higher amount through VA.

Any insight would be helpful. Thanks!

VA loans have a funding fee, which is typically 2.15% (usually it's financed into the loan balance). If you're putting 20% down, there's no PMI either way. VA loans do have killer rates, but again that's at a cost of 2.15%.

Ask your lender to compare 2.15 discount points w/ conventional to VA with that 2.15% funding fee, see which has the better rate.