FHA vs VA Loan: Knowing the Difference
You have a new wife and a baby on the way and it’s time to move into a place that accommodates your growing family. There’s this house that you’ve wanted forever and it’s finally on the market.
However, you don’t know a way to get a loan. Luckily, there might be some ways that you can make it happen. Many people talk about FHA and VA loans. But which one is best for you and your family?
Here is a quick guide to the FHA vs VA loan and which one would be the best for you to make that family dream come true.
What Is A FHA Loan?
The Federal Housing Administration is one of many parts that are administered by the U.S. Department of Housing and Urban Development. They insure these loans, hence the name FHA.
FHA loans act as insurance. If the borrower defaults on a loan, they pay the remaining debt back to the lender. This allows for housing opportunities to be given to people who otherwise might not be able to afford housing.
Some of the benefits include lower credit score requirements, lower down payments, and allowing closing costs to be rolled into the loans.
What Is A VA Loan?
VA loans are also administered by the United States government but are administered by the Department of Veteran’s Affairs. If you are a serviceman (active duty or retired) you can qualify for a VA loan.
The government offers certain guarantees to the lenders of VA loans. This allows the lenders to offer more generous options for the several types of VA loans out there, such as no money down payments, less strict requirements, lower interest rates, and more.
FHA Vs VA Loan
When deciding on whether to apply for an FHA loan or a VA loan there are certain factors that you need to consider.
First, VA loans are not open to the public like FHA loans. You must be a serviceman to even begin to qualify. After that, you are still subject to lender requirements.
However, FHA loans require you to have a credit score of 580 or higher. VA loans on the other hand do not have any credit requirements.
VA loans don’t require mortgage insurance like FHA loans, but they do uniquely require a VA funding fee. This fee helps to fund the loan program.
FHA loans usually require about 3.5 percent of the downpayment. However, if you have a low credit score then you have to pay about 10 percent. VA loans in contrast don’t usually require a closing fee.
If you’re interested in more information to help you get a mortgage, you can check it out here
HowTo Get Approved For Mortgage
Depending on whether you are a serviceman or a civilian, there are many options for you to help you finance your first home. Choosing an FHA vs VA loan simply comes down to your qualifications.
Your new family deserves to grow up in that house you’ve always wanted. Don’t wait forever to make it happen, take a look and consider your options today.
For other informational and interesting articles about how to get your housing financed and approved, be sure to take a look at our blog.