FHA and VA Loans

Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) loans are popular homebuyer choices. These loans must meet certain requirements.

FHA loan

  • Low down payment options
  • Available for a variety of loan terms
  • Typically requires mortgage insurance

Features

  • Available in a variety of fixed-rate and adjustable-rate loan options
  • Has down payment options as low as 3.5%
  • May allow you to use a gift or grant for all or a portion of the down payment or closing costs
  • You typically have to pay upfront and monthly FHA Mortgage Insurance premiums

Benefits

  • Requires less cash upfront for your down payment and closing costs
  • Available for all income levels
  • Allows a new buyer to take over the loan if you sell your home (subject to loan approval)
  • Allows a co-applicant to help you qualify even if the person doesn't live in the home

Considerations

  • FHA loans have the benefit of a low down payment but there are other loan products with the same option
  • Be certain to ask your home mortgage consultant to help you compare the overall costs of all products, including the monthly and long-term costs and conditions of the required mortgage insurance
  • You can typically only have one FHA mortgage at any given time
  • In many instances, you may find FHA to be a more expensive financing option and should be considered after thoroughly evaluating all other product options that meet your credit qualifying and financial needs

VA loan

  • Financing for eligible service members
  • No-down-payment options available
  • One-time VA funding fee typically required

Features

  • Provides financing for qualified veterans, reservists, active duty personnel, or eligible family members
  • Available in a variety of fixed-rate and adjustable-rate loan options
  • Has low- and no-down payment options
  • Allows closing costs to come from a gift or grant

Benefits

  • Provides a wide range of rate, term and cost options
  • Doesn't require monthly mortgage insurance
  • Provides the potential for minimal out-of-pocket expenses with seller contributions

Considerations

  • You typically have to pay a one-time VA Funding Fee that can be financed into the loan amount
  • You can get financing for your primary residence only