Is VA OK To Get A Loan?

Matthew is in a good financial position, and thinks it's a good idea to go for a VA loan. Dave thinks otherwise.

QUESTION: Matthew and his wife are completely debt free and they are new parents. They’ve built up an $8,000 emergency fund and he’s active duty Air Force. They are renting and putting away 15% for retirement. He wants to take out a VA loan since they don’t have a down payment for a house. Is that a good idea?

ANSWER: A VA home loan are one of the more expensive kinds of loans. It’s a veteran’s benefit, but it’s not actually a benefit because you can get a conventional loan at less fees and lower interest rates. The only advantage of the VA house loan is that you can put nothing down, which I don’t consider an advantage; it’s a trap. Save a good down payment instead of doing a VA mortgage.

You’ve done a great job and gotten out of debt, and are investing well. Maybe you might consider stopping retirement contributions for a year to get your down payment together. You’ve got the itch to buy for a couple of reasons; the baby’s here and you can see the light at the end of the tunnel as far as your military service goes. You have this emotional need to look at a house and say that you own it.