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in Taft, CA
Taft homebuyers face an important choice between conventional and VA financing. Both loan types offer distinct advantages depending on your military service status and financial situation.
Understanding these differences helps you secure the right mortgage for your Kern County home purchase. This comparison breaks down what each option offers and who benefits most from each program.
Conventional loans represent traditional mortgage financing without government backing. These mortgages come from private lenders and follow guidelines set by Fannie Mae and Freddie Mac.
Down payments typically range from 3% to 20% of the purchase price. Borrowers putting down less than 20% usually pay private mortgage insurance until reaching 20% equity.
Credit score requirements generally start at 620, though higher scores unlock better rates. Debt-to-income ratios typically need to stay below 43% for approval, though some lenders offer flexibility.
VA loans provide zero-down financing for eligible veterans, active-duty service members, and qualified surviving spouses. The Department of Veterans Affairs guarantees these mortgages, reducing lender risk.
No down payment requirement makes homeownership more accessible for those who served. VA loans also eliminate monthly mortgage insurance, creating significant savings over the loan term.
Funding fees typically range from 1.4% to 3.6% of the loan amount, depending on service type and down payment. First-time users generally pay lower fees than subsequent users.
The most significant difference involves down payment requirements. VA loans offer zero-down financing, while conventional loans typically require 3% to 20% down for Taft purchases.
Monthly costs differ substantially between these programs. Conventional borrowers pay PMI with less than 20% down, while VA borrowers avoid this expense entirely but pay an upfront funding fee.
Eligibility creates the clearest dividing line. VA loans exclusively serve military members and veterans, whereas conventional loans remain open to all qualified borrowers regardless of service history.
Property standards vary between programs. VA loans require properties meet specific safety and condition standards, while conventional loans offer more flexibility with property types and conditions.
Your military service status makes the initial decision straightforward. If you qualify for VA benefits, this program typically offers superior terms with zero down and no monthly insurance costs.
Conventional loans work better for non-veterans or properties that don't meet VA standards. They also provide flexibility for investment properties and second homes that VA loans cannot finance.
Consider your available cash and monthly budget when choosing. VA loans preserve cash by eliminating down payments, while conventional loans may require significant upfront funds but offer broader property options.
Rates vary by borrower profile and market conditions. Both programs can deliver competitive financing when you meet their respective qualification standards.
VA loans require properties meet specific safety and livability standards. The home must pass a VA appraisal and serve as your primary residence, not an investment property.
Not necessarily. While conventional loans typically start at 620 credit scores, VA loans offer flexibility for lower scores. Both programs reward higher credit with better rates.
VA loans often cost less due to no down payment requirement and no monthly insurance. However, the upfront funding fee and your specific rate determine total costs.
Yes, through refinancing. VA Interest Rate Reduction Refinance Loans let eligible borrowers refinance conventional mortgages into VA loans to eliminate mortgage insurance.
Conventional loans generally accept more property types and conditions. VA loans require properties meet habitability standards and may scrutinize rural properties more carefully during appraisal.