CAL Vet Loan vs. VA Loan: What's the Difference?

When you're ready to buy a home as a veteran or active-duty military member, you deserve financing that works in your favor. At Merchants Home Lending, we specialize in helping service members navigate the two most powerful loan programs available in California: the CAL Vet Loan and the VA Loan. Both options are designed to make homeownership more accessible for military personnel—but they operate quite differently.

Let’s break down the core differences between CAL Vet Loans and VA Loans so you can make the best choice for your financial future.

What Is a CAL Vet Loan?

The CAL Vet Loan is a unique home loan program administered by the California Department of Veterans Affairs (CalVet). This state-run program is tailored specifically for California-based veterans and active-duty service members.

Key Benefits of CAL Vet Loans:

• Administered by the State of California: Oversight and servicing are handled directly by CalVet, not private lenders.
• Interest Rate Subsidy: Lower interest rates than many conventional options, helping reduce monthly payments.
• Flexible Qualification Guidelines: Open to a wider range of military service categories.
• No Down Payment Required: For qualified buyers, zero-down options are available.
• Loan Variety: Fixed-rate, adjustable-rate, and CalHFA ZIP loan products are available for down payment assistance.
• Equitable Title Holding: CalVet holds legal title to the home until the loan is paid in full, providing an extra layer of security for the state.

What Is a VA Loan?

VA Loans are federally backed mortgage loans guaranteed by the U.S. Department of Veterans Affairs. Available in all 50 states, these loans are provided through private lenders like Merchants Home Lending.

Key Features of VA Loans:

• No Down Payment: Buy a home with 0% down, subject to eligibility.
• No Private Mortgage Insurance (PMI): Keep your monthly costs low, even without 20% down.
• Competitive Interest Rates: VA Loans typically feature favorable rates compared to conventional loans.
• Flexible Closing Costs: Sellers can contribute to the buyer's closing costs.
• One-Time Funding Fee: Varies depending on service history and down payment but can be rolled into the loan.
• Full Title Transfer: Borrowers take legal ownership at closing, just like with conventional mortgages.

Comparing CAL Vet Loans vs. VA Loans

Which Loan Is Right for You?

At Merchants Home Lending, we’re committed to helping California’s military families choose the right loan product based on their needs, goals, and location.

Choose a CAL Vet Loan if you:

• Live in California and want to benefit from the state’s interest rate subsidies.
• Prefer the state managing your loan servicing.
• Are interested in CalVet’s fixed or adjustable-rate options or CalHFA ZIP assistance.

Choose a VA Loan if you:

• Want more flexibility with lenders and loan features.
• Need a federal option that’s usable in multiple states.
• Prefer to hold full title to your home from day one.

Why Work With Merchants Home Lending?

Our team understands the unique needs of military families and veterans. Whether you’re leaning toward a CAL Vet Loan or a VA Loan, we’ll help you:

• Confirm eligibility
• Compare interest rates and terms
• Understand all loan costs (including funding fees)
• Navigate the pre-approval and application process

Final Thoughts

Whether you choose a CAL Vet Loan or a VA Loan, both options provide an outstanding pathway to homeownership for veterans and active-duty personnel. At Merchants Home Lending, we’re here to guide you every step of the way—from eligibility to closing.

Contact us today to find the best loan program for your needs and take the first step toward owning your dream home.

Frequently Asked Questions (FAQs)

1. Can I qualify for both a CAL Vet Loan and a VA Loan?

Yes, if you’re eligible for both programs, you can choose between them. However, you can only use one loan for a specific home purchase.

2. Do CAL Vet Loans offer better rates than VA Loans?

CAL Vet Loans often provide interest rate subsidies, which may result in lower rates. However, VA Loans are also highly competitive. The best option depends on your financial profile and the current market.

3. Is there a funding fee for both loan types?

Yes. Both CAL Vet and VA Loans require a funding fee, although it’s typically lower for first-time users and may be waived for disabled veterans.

4. Who services the loan if I use a CAL Vet Loan?

The California Department of Veterans Affairs (CalVet) services the loan directly, whereas VA Loans are serviced by the lender (like Merchants Home Lending).

5. Can I use a CAL Vet Loan to buy a second home or investment property?

No. CAL Vet Loans are strictly for primary residences. VA Loans are also limited to primary residences but can later be reused under specific conditions.