One of the many great benefits of the VA home loan program is that there are no prepayment penalties for paying off your loan early. That means you have the freedom to make extra payments on your home loan anytime!

What’s the Prepayment Penalty with Other Loan Programs?

Let’s compare. Other loan programs have the following extra fees attached to prepayments:

  • Conventional loans – As a result of the Dodd-Frank Act, penalties for prepayment are limited to 2% of your loan amount during the first 2 years and 1% for the third year. However, there cannot be a penalty after 3 years.
  • FHA loans – Interest is charged for any days left in the installment period. So, if you pay your loan off on the 1st of the month, but your installment due date is the 15th, you’ll pay interest for those 14 days. (Source:

Essentially, VA home loans let you take the most control of your loan payments.

The INTEREST-ing Benefits of Paying Off Your VA Loan Early

The longer you owe a bank money, the more interest you pay. That’s more money out of your pocket in addition to your principle payment. According to the the article at, making even one extra mortgage payment a year can take 2.5 years off your term. Now that’s exciting! You can break that one extra payment up by paying 1/12 of your principle and interest per month to achieve that goal. Again, you have the freedom to pay any extra amount each month. Fear no penalty with a VA loan!

Other Ways to Save on Interest with a VA Loan

Before you complete your VA loan purchase, consider the additional ways you can save on interest:

  • Make a down payment – VA loans do not require a down payment for VA buyers with full entitlement, but that doesn’t mean you can’t make one. Any amount that you put down on your home will save you money within your loan term.
  • Pay points -a “point” is an upfront fee that is paid at closing to reduce your interest rate. One “point” is always 1% of the loan amount. For instance, using a $600,000 loan amount, one point would cost $6,000 at closing. By paying points, you’ll decrease your monthly payments and you will decrease the total amount of interest paid over the life of the loan.

Do you have questions about your VA home loan benefits or want to start the pre-approval process? Contact Hawaii VA Loans today!