FHA Loans vs VA Loans?

FHA (Federal Housing Administration) loans and VA (Veterans Affairs) loans are both types of government-backed mortgage loans, but they are designed for different groups of people and have different requirements.

 

Here are some key differences between FHA loans and VA loans:

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• Eligibility: FHA loans are available to all homebuyers, while VA loans are only available to eligible veterans, active-duty military personnel, and surviving spouses.

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• Down payment: FHA loans require a minimum down payment of 3.5%, while VA loans do not require a down payment.

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• Mortgage insurance: FHA loans require borrowers to pay mortgage insurance premiums (MIP) for the life of the loan, while VA loans do not require mortgage insurance.

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• Credit score requirements: FHA loans have more lenient credit score requirements than VA loans, with a minimum score of 580, while VA loans typically require a minimum score of 620.

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• Loan limits: FHA loans have maximum loan limits that vary by location and are generally lower than VA loan limits, which do not have a cap.

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• Fees: VA loans have a funding fee that is typically added to the loan amount and can range from 1.4% to 3.6%, depending on the type of loan and whether the borrower has used their VA loan benefits before. FHA loans have an upfront mortgage insurance premium (UFMIP) that can be financed into the loan, as well as an annual MIP.

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Overall, both FHA and VA loans can be good options for homebuyers, depending on their specific needs and eligibility. Contact our team at Northwest Alternative Mortgage to discover which lending option is the best fit for you!