FHA vs. VA Loans: Which Is Best for You? www.a1mortgage.com

What Is a VA Loan? A VA loan is a home loan that is guaranteed by the U.S. Department of Veterans Affairs (VA). Eligible veterans, active-duty service members, reservists, and surviving spouses may apply for the loan.

You should have good credit, enough income, and a valid Certificate of Eligibility (COE) to be eligible for a VA loan. The COE proves that you are eligible for a VAbacked loan from the lender.

What Is an FHA Loan? An FHA loan is a home loan that is insured by the Federal Housing Administration (FHA). It is designed for low- to moderate-income borrowers who may have less than perfect credit. Everybody can apply for an FHA loan. FHA loans need a minimum down payment of 3.5% and both an up-front mortgage insurance premium and monthly mortgage insurance payments.

Differences Between FHA And VA Loans

Applicant Eligibility VA loans are only available to eligible veterans, active-duty service members, reservists, and surviving spouses. FHA loans are available to anyone who qualifies.

Mortgage Insurance FHA loans require both an up-front mortgage insurance premium (UFMIP) and monthly mortgage insurance payments. The monthly payments are often added to the borrower’s mortgage payment. A one-time funding fee is often rolled into the loan with a VA loan, but there is no monthly mortgage insurance premium.

Down Payment Requirements Both FHA and VA loans make homeownership more accessible to borrowers by offering low down payment options. You can put as little as 3.5% down with an FHA loan. And if you’re a first-time homebuyer, you may be able to put down even less with a special FHA program. You can pay out as little as 0% down with a VA loan. If you’re a qualified Veteran, you may be eligible for 100% financing.

Credit Score Requirements

For an FHA loan, you need a credit score of 580 or higher to qualify. Borrowers willing to make a 10% down payment need to find mortgage companies in Missouri that can qualify them with a credit score of only 500. For VA loans, the minimum credit score is not set in stone, but most lenders require a score of at least 620. For more information

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