• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
MyLendingPal Logo

MyLendingPal

Georgia Mortgage Brokers

  • About
    • Blog
    • Careers
    • FAQs
    • Our Process
  • Home Loans
    • Conventional
    • FHA
    • First Time Home Buyers
    • VA
  • Refinancing
  • Resources
    • Are You Ready To Buy?
    • Finding The Right Home
    • How To Find An Agent
    • How To Get Pre-Approved
    • How To Make An Offer
  • Calculators
    • Balance
    • Conventional Loan
    • FHA Loan
    • VA Loan
  • 833.379.0797
  • Apply Now

FHA Vs VA Loan

February 12, 2021

A Veteran and his wife showing wooden house sign. <a href=VA loans do not normally require any down payment” width=”300″ height=”200″ />A VA loan is a great way for military service members and veterans to buy a home. These loans can be very attractive because there is no down payment or mortgage insurance requirement. However, in some cases, an FHA loan may turn out to be the better choice, particularly if your credit score is low.

What Is An FHA Loan?

An FHA loan is backed by the Federal Housing Administration and is designed for borrowers with a low to moderate income. The required minimum down payment is lower than it would be on a conventional loan, and the credit score requirements are also lower.

What Is A VA Loan?

A VA loan is backed by the U.S. Department of Veterans Affairs and is considered a benefit for active duty military service members and veterans as well as some surviving spouses. There are some specific requirements pertaining to the number of days of service, but some people may still qualify if, for example, they were discharged for a service-connected disability.

FHA Vs VA Loan

Here is a look at what you need to know about these two types of loans so you can make an informed decision.

Property Type

A VA loan agent handing house keyWith both VA loans and FHA loans, the property involved must be the borrower’s primary home. The home must be considered safe and structurally sound. Homes being purchased with FHA loans need to meet minimum requirements established by the Department of Housing and Urban Development, while homes being purchased using a VA loan must meet Department of Veterans Affairs requirements.

Down Payment

The minimum down payment for FHA loans is currently 3.5%. These loans have limits that can vary depending on where you live and are sometimes reset. For example, in 2020, the most a person could borrow using an FHA loan was set at $331,760 in low-cost counties and $765,600 in high-cost counties.

VA loans do not normally require any down payment. For borrowers who have full entitlement to VA loans, a new law has put an end to limits on the maximum amount that can be borrowed without making a down payment. However, borrowers who currently have other active VA loans or who have defaulted on VA loans in the past will be subject to certain limits that mirror the guidelines set by the Federal Housing Finance Agency for conforming loans. In a typical U.S. county, the limit is $510,400; it will be higher in areas that have a higher cost of living.

Mortgage Insurance And Fees

Mortgage insurance concept. The minimum down payment for FHA loans is currently 3.5%One important expense that must be calculated when getting a mortgage is the cost of mortgage insurance, which reimburses the lender should you default on your loan.

With an FHA loan, borrowers must pay mortgage insurance in the form of both an upfront insurance premium fee and a monthly fee that is added to the mortgage payment. The upfront cost can be rolled into the loan. The monthly premium will depend on the amount of the loan and your down payment as well as the length of the loan.

Although VA loans do not require mortgage insurance, borrowers must pay a one-time VA funding fee. This can be anywhere from 1.4 to 3.6 percent of the amount of the loan. This fee varies depending on your down payment, your military service and whether you have taken out a VA loan in the past. This fee can be paid up front or rolled into the loan.

Minimum Credit Score Required

These loans also vary in terms of their credit score requirements. The lowest credit score a borrower can have and still qualify for an FHA loan is 500. However, a score of 580 is required to be eligible for making a down payment of 3.5 percent. Those with credit scores between 500 and 579 need to make a down payment of 10 percent.

Although the VA has not set a minimum credit score for VA loans, lenders are free to set their own limits. Many require a minimum credit score of 620. Some lenders offer financial consulting to VA borrowers who are struggling to meet the minimum credit guidelines. Those with lower credit scores may find an FHA loan to be a better option than a VA loan.

Borrowers who get VA loans tend to have higher average credit scores than those who get FHA loans. Mortgage data provider Ellie Mae reports that the average FICO score for VA loan borrowers ranged from 707 to 712 in 2019; the average for those getting FHA mortgages was 672 to 677.

Debt-To-Income Ratios

A borrower’s debt-to-income ratio should also be considered. This is the percentage of gross monthly income the borrower must pay toward their debts. Although there is no maximum DTI for VA loans, those applicants whose DTI exceeds 41 percent are given a closer review to ensure they will be able to cover their living expenses after making their mortgage and other debt payments.

For an FHA loan, the maximum debt-to-income ratio is generally 50 percent, although some people may be held to a lower threshold based on their credit score and other factors.

According to Ellie Mae, the average DTI for FHA mortgages in 2019 was 43 to 44 percent, while the average DTI for VA loans was 42 to 43 percent.

Work With My Lending Pal On FHA Vs VA Loan

If you are interested in getting a mortgage to purchase a home, get in touch with the experts at My Lending Pal to discuss the options that are available to you and determine which one will serve you best.

Citation: https://www.nerdwallet.com/blog/mortgages/fha-vs-va-loan/

Primary Sidebar

Have a question?

Ask a question or request a consultation, and we will respond to you in a timely manner.
  • This field is for validation purposes and should be left unchanged.

Home Loans

  • Conventional
  • FHA
  • First Time Home Buyers
  • VA

Calculators

  • Mortgage Balance
  • Conventional Loans
  • FHA Loans
  • VA Loans
Contact
833.379.0797
Email
info@mylendingpal.com
Address
5400 Laurel Springs Parkway, Suite 304 Suwanee, GA 30024

Footer

MyLendingPal Logo

Home Loans

  • Conventional
  • FHA
  • First Time Home Buyers
  • VA

Calculators

  • Mortgage Balance
  • Conventional Loans
  • FHA Loans
  • VA Loans

Get the latest news & updates

Equal Housing Lender Logo
MyLendingPal, Inc, NMLS ID #1734346, (www.nmlsconsumeraccess.org); Corporate Office: 5400 Laurel Springs Parkway, Suite 304, Suwanee, GA 30024. Georgia Residential Mortgage Licensee #61544. Principal Loan Originator: Ricky Merchant, NMLS ID: 1517056. Georgia License # 54264. For questions regarding state licensing, please contact (404) 433-8918. Not all products and options are available in all states. Terms are subject to change without notice. Any rates or terms are speculative only and can change without notice.
Google Rating
5.0
MyLendingPal, Inc
MyLendingPal, Inc
5.0
Balachandar Sundaresan
Balachandar Sundaresan
17:30 23 Jun 20
Roger Merchant and his team were very helpful, right from getting a great rate to completing all process on time and being super responsive. Would happily recommend him!!
Dinesh Nair
Dinesh Nair
14:41 30 Jan 20
I would definitely recommend MyLending Pal for all mortgage needs. It all started with a great competitive quote on refinance and excellent service continuing all the way until closing. Priti, Ricky and Roger were a pleasure to work with.
Ramesh Kumar
Ramesh Kumar
02:03 17 Dec 19
I would really recommend Nations First Home Mortgage, if you are looking for the best home mortgage options. I was very much glad to work with this team and they have saved lot of time and money!!
gulshan rai
gulshan rai
03:21 17 Apr 19
I would highly recommend Mr Roger to anyone in the area looking for an amazing lender. He made the mortgage process so easy and effortless. I could tell him and his team were very attentive to all the details that came with applying for a mortgage and were quick to remind me of any deadlines that were approaching.It was super easy to work with Mr Roger.My special thanks to preeti who did an amazing job to get things done in the timely manner. If I had any questions, it was almost like she was waiting at her desk for my phone call to answer the questions immediately. The loans closed on time and without a glitch. I would highly recommend them to anyone
Ajith Nair
Ajith Nair
01:50 13 May 19
We highly recommend Roger for financing mortgage. Roger and his team were excellent through out the process and we had a very smooth purchase. They were always available when we had any questions. It was an amazing experience working with Roger and his team.
Pratul Patwari
Pratul Patwari
13:03 20 Jul 20
Roger Merchant and Priti Vin helped us in buying our first home. They understood our needs and took care of everything for us. They were very good with the communication through the process. They will always be my first choice in future for the mortgage services.
Sujatha Hariharan
Sujatha Hariharan
20:51 26 Jul 20
They were able to find me great rates. Service was quick and communication prompt. The loan process can be daunting as is the document gathering process but this was the easiest and quickest that I have experienced. Highly recommend!
Dinesh Nair
Dinesh Nair
15:53 30 Jul 20
I would definitely recommend MyLending Pal for all mortgage needs. It all started with a great competitive quote on refinance and excellent service continuing all the way until closing. Priti, Ricky and Roger were a pleasure to work with.
Manu Pushpanath
Manu Pushpanath
15:59 29 Jul 20
Great lender to work with. Right from document collection till closing they did it in 2weeks. The fastest closing I heard and get to experience myself. One improvement I suggest is it will be good if the closing attorney can come into the house for completing the closing. Considering current situation it will add a lot of value to the reputation. Thanks Milan and team for a good closing experience.
Sakthi S
Sakthi S
20:46 01 Sep 20
Would definitely recommend Roger and his team.Refinanced for the second time and with roger, I didn’t feel like I refinanced.The process was very smooth and fast.The rates were very competitive and it was amazingworking with Roger and his team.I’d recommend him for sure.
Sunny Patel
Sunny Patel
21:17 01 Sep 20
They were quick, courteous, and professional. They got me an excellent rate and helped make the process smooth. I would recommend using to my friends and family!
Emmitt Rathore
Emmitt Rathore
14:57 22 Dec 20
Roger helped us find an unbeatable rate!His decades of work in the industry made it easy for us to complete many processes with the lender, and helped us close on time!I will definitely be passing the good word around and recommending family and friends to him.I look forward to our next real estate transaction with them.
M Alamoti
M Alamoti
01:02 11 Jan 21
I had the experience of using their service. They know what they are doing. They are very honest, professional and caring. I have no doubt and hesitation to recommend them to anyone who is looking to purchase a home. I am very pleased for their service.
Next Reviews Write a review
powered by Google

© 2021 MyLendingPal · Powered by 321 Web Marketing · Website Privacy Policy & Terms of Use