There are multiple advantages of obtaining a VA home loan. Since part of the loan amount is guaranteed by the Veterans Administration, the borrower is not required to make any down payment nor does he have to pay exorbitant interest rates on the loan amount. Moreover, the homes constructed under the VA loan program must carry a warranty from the builder, thereby insuring the buyer from any possible damage or repairs.

In comparison to pros, the disadvantages of a VA home loan seem to be insignificant. Still, they are worth mentioning and knowing.

1. Borrowers are required to make a one-time funding fee on VA loans. The fees might range from 1.25 to 3 percent of the loan amount and is determined based on the applicant’s service length. The fee also varies based on whether the loan taken is the first or second loan. Usually, most applicants are charged with a 2 percent upfront fee. Upfront fee can be lowered in case the borrower makes a 5 percent of down payment,

2. VA loans are notoriously reputed to take a long processing time. Hence, many sellers are often reluctant to work with somebody who has applied for VA loans. However, the fact is that the actual loan process for obtaining a VA loan takes about the same time as a conventional loan, which is equal to 2-6 weeks.

3. In case of VA loans, borrowers are not required to pay closing costs. While part of it is paid by the lender, the other part is paid by the seller. Therefore, many sellers may not be ready to negotiate sale price of the home if the buyer is someone who is gaining VA loan to purchase the home.