FHA vs. VA loans | finder.com
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FHA vs. VA loans

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Ease the financial burden of buying a home with these government-backed loans.

Buying a home is among the biggest and most exciting commitments you’ll ever make. But how do you choose the right financing? Like every mortgage, FHA and VA loans have their advantages and disadvantages.

How do FHA loans differ from VA loans?

Both are government-backed mortgage programs, but they come with different eligibility requirements, terms and loan limits.

FHA loansVA loans
EligibilityAnyone who meets the income and credit score requirementsEligible veterans and surviving spouses who have not remarried
Institutional supportFederal Housing AdministrationVeterans Administration
Credit score requirement500 or higherNone
Down payment3.5% to 20%None
Lender optionsAny FHA-approved lenderAny VA-approved lender
(The VA can lend directly, but it’s rare.)
Interest ratesSubject to market conditions and negotiable between the lender and borrowerSubject to market conditions and negotiable between the lender and borrower
Types of properties– Single-family homes and 2- to 4-unit properties
– Select manufactured and mobile homes
– FHA-approved condos and townhomes
– Single-family homes and 2- to 4-unit properties
– Select manufactured, mobile and modular homes
– VA-approved condos
– Select construction sites
Owner-occupancy requirementYesYes

Learn more about FHA loans

Learn more about VA loans

What are the benefits of a FHA loan and a VA loan?

Each loan offers fixed rates and is designed to ease the financial pressure of buying a home. The finer details vary by loan type.

What are the drawbacks of FHA loans and VA loans?

For both loans, seller hesitation can be a factor — especially in a hot market. Consider the other potential disadvantages by mortgage type.

Which option is best for my needs?

It depends on your situation. FHA loans are popular, especially with first-time homebuyers earning a low to median income. Given lenient eligibility requirements, they’re a good option for borrowers with high debt-to-income ratios and low credit scores.

To avoid being blindsided, factor the required mortgage insurance into your budget. You’ll pay an upfront premium at closing and then make monthly payments for the life of the mortgage.

VA loans don’t require a down payment or mortgage insurance, which cuts your overall costs significantly. They also come with attractive tax perks and relaxed credit requirements. But they’re open to military members only.

The big question: Do you qualify for a VA loan? These loans are notorious for strict home assessments. So if you’re eligible, your best bet is to find a home that’s ready to move into to speed up the appraisal process.

Name Product Min. down payment Origination fee
Depends
Get personalized rates in minutes and then choose a refinancing loan offer from several top online lenders.
3.5%
Depends
Connect with vetted home loan lenders quickly through this online marketplace.
3%
0.5% to 1.0%
Flexible options, fast approvals and support online backed by a trusted brand.
3.5%
1.0% to 5.0%
A nontraditional lender offering impartial guidance on a range of loans, though with potentially high fees.

Compare up to 4 providers

Name Product Rates
As low as 4.99%
Fast turnaround and competitive fixed rates for qualified borrowers with only an origination fee.
As low as 4.25%
Connect with vetted lenders quickly through this free online marketplace.

Compare up to 4 providers

Bottom line

While FHA loans are flexible and easier to apply for, borrowers are hit with monthly insurance payments that last the life of the mortgage. But VA loans are exclusive: Requiring no down payment, they’ve opened the homeownership doors to many military members.

Compare your home financing options in our comprehensive guide to mortgages.

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