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VA Loans – What Makes Them Great? | PenFed Credit Union

What you'll learn: Learn the benefits of obtaining a VA home loan and if it’s right for you.


VA Loans: What Makes Them Great?

You served. You sacrificed. Now, you deserve a place to plant roots and call home.

You’re in luck: The Department of Veterans Affairs (VA) loan program offers unique benefits that make home ownership possible, and often more affordable, than mortgage options available to civilians. In this article, we’ll count the advantages of a VA home loan and explore some of the numbers behind the millions of military families who’ve already reaped its benefits. Will you be next?

5 benefits of the VA loan

Do VA home loans require a down payment? Who pays closing costs on a VA loan? Do you need good credit for a VA loan?

Questions abound surrounding this topic, and we’re happy to share that the answers usually bring relief and reassurance to aspiring homeowners. Here are some of the most compelling benefits of a VA mortgage loan.

1.   No down payment

Saving for a down payment can separate the homebuying dream from reality – or at least push it back a few years. VA loans provide the rare opportunity to purchase a home with as little as no money down. This is a huge advantage over other mortgage types, which typically require at least 3.5 percent down.

2.   Better interest rates

A lower interest rate can reduce monthly payments and save you thousands of dollars over the life of your loan. VA home loans generally have lower interest rates than conventional or Federal Housing Administration (FHA) loans.

3.   No mortgage insurance

Other home loans may require you to pay mortgage insurance if you have a low down payment, which protects your lender if you stop making payments. Because VA loans are backed by the federal government, no insurance is required – lowering your monthly payment and allowing you to save or put more money toward the principal each month.

4.   Fewer closing costs

Closing costs cover the time and expenses from activities like the mortgage underwriting, title and record filings, application and attorney fees, inspections, and more. The VA limits the total amount of VA closing costs or fees you can pay. Instead, the seller pays these fees.

5.   Easier loan qualifying

VA loan guidelines can be slightly less restrictive than those for a typical mortgage. You will still need to qualify based on credit, income, and  VA eligibility but, overall, the process can be easier than it is for a conventional or FHA loan.

A brief history of the VA loan program

The VA home loan program dates back to World War II as part of the Servicemen’s Readjustment Act of 1944. According to the VA’s legislative history, credit was viewed as a cornerstone to helping veterans readapt to civilian life. Because members of the Armed Forces may have missed the opportunity to establish credit, they could be at a disadvantage for loan approval. The VA’s program leveled the playing field and offered a reward for veterans’ sacrifice.

What it means for VA loans to be “government-backed”

We already mentioned that VA loans are insured by the U.S. government, which provides protection for lenders if borrowers default on their loans. That means, ultimately, U.S. taxpayers fund the VA home loan program. The VA collects a funding fee from most VA borrowers to help reduce costs for taxpayers and make the program possible.

Who gets VA loans? Here’s the breakdown

Think VA loans are only for a select few? Think again: VA-backed loans hit a record in 2021, with over a million loans processed in a single year! Let’s take a closer look at how VA loans were distributed in 2018:

Most VA loan borrowers put no money down

Is the promise of no down payment with a VA loan just marketing hype? The data says otherwise. In fact, nearly 80 percent of all VA purchase loans had no down payment.

Fist time vs. previous homebuyers

It’s a common misconception that VA loans are meant for first-time homebuyers. It’s actually close to an even split, with the majority actually going to previous homeowners.

First-Time Homebuyers

Previous Homebuyers



VA loans span all ages

Worried you missed the boat and should’ve applied years ago? Consider this an invitation to come aboard. Your VA loan benefits don’t expire with age or after a certain number of years after discharge. As you can see, VA loans are obtained by adults in all seasons of life.

Ages 18–25


Ages 36–55


Ages 56 and up


Ready to dig deeper?

Our latest eBook is here! With everything VA loan: How does a VA loan work? What sets them apart from conventional loans? And how do you qualify? From unique benefits to eligibility, loan options, and more, this eBook brings together the most important details so you can get started on your path to home ownership and refinancing through VA programs.

This downloadable eBook is your go-to for everything VA loan, including:

  • Benefits of the VA loan
  • VA certificate of eligibility
  • VA vs. conventional loan
  • VA funding fees
  • VA refinance requirements

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Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

VA Disclosures

1Rates are updated daily at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $450,000; loan-to-value ratio of 95%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.