The government offers two popular home mortgage products, the VA loan and the FHA mortgage. Both are great home loans, but there are significant differences and requirements top qualify.
VA Home Loan Opportunity for Military Borrowers
In most cases, VA mortgage loans are offered to the military, who want to buy or refinance a house but do not want to put more money down or pay more for upfront lending costs then they have to. VA finance programs are available for active military and veterans who have the VA loan eligibility. For existing VA borrowers, VA refinancing is simplified greatly with VA streamline loans. If you have saved a significant down payment, it may actually be less expensive for an applicant to choose a conventional home loan that does not charge the VA funding fee. There other home mortgage loans that offer benefit without going the VA financing route. HUD’s FHA mortgage product offers an alternative for low-income borrowers, so consider applying for a FHA mortgage loan.
FHA vs. VA Home Mortgage Programs
FHA home mortgage loans are available to borrowers from a non-military background through the Federal Housing Administration and are similar to VA loans in that they are secured. FHA loans do require a 3.5% down-payment. So on a $300,000 loan, the FHA borrower would be required to come up with a $10,500 down-payment. The VA loan is a 100% financing option so going with the VA mortgage would save a qualified borrower $10,500 because it is a no money down loan. FHA mortgage loans also require mortgage insurance. The MI may be minimal if the home is bought for a price significantly below the market value of the home. Consider your financing options carefully to make sure that you are getting the best loan for you: your credit score, income, home price, home value, and amount of money available for upfront costs.
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