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FHA and VA Loans

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

 


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