VA Loans vs. FHA loans

VA Loans and FHA Loans - The Tuttle Group

VA Loans and FHA Loans - The Tuttle Group The federal government has long espoused the value of homeownership as a step forward in a successful life. To make homeownership a reality for more Americans, the government provides backing for two different types of loan programs: the VA Loan and the FHA Loan.

Unless you work in financial services, you’re probably unaware of the differences between FHA and VA home loan requirements. The team at the Tuttle Group has put together this short overview to help keep you informed in your search for the right loan product.

FHA and VA Loan Basics

FHA and VA loans lower borrowing costs for a broader cross-section of borrowers. The government insures loans under both programs, meaning that taxpayers provide a guarantee against default.

FHA loans fall under the Federal Housing Administration, an arm of the U.S. Department of Housing and Urban Development. The loans target lower-income and first-time buyers and those with less-than-perfect credit.

By contrast, the Veterans Administration administers the VA loan program. The program’s goal is to reward and thank veterans and their families for their service in the U.S. military.

Differences Between FHA and VA Loans

Anyone who meets program requirements can apply for an FHA loan if they meet basic requirements, such as a down payment as low as 3.5% of the purchase price of the home and a minimum credit score of 580. Those requirements are relaxed in comparison to most, if not all, conventional mortgage loans.

FHA applicants also must meet the requirements for the house they wish to purchase. The house must be appraised by an FHA-approved appraiser and pass inspection. You also must agree to use the home as a primary residence only and move in within 60 days of the loan closing.

In return for the lending guarantee, FHA-approved lenders can offer more favorable terms, such as lower interest rates available and a lower down payment than otherwise with a conventional mortgage loan.

By contrast, VA loan benefits are only open to current military members and veterans who meet the proper service requirements, which are generally 181 days consecutively during peacetime and 90 days consecutive during conflict or overseas service. National Guard, Reserve members, plus families also may qualify.

VA loan requirements do not include down payments or private mortgage insurance, which contrasts with the FHA loan. Also, because the VA loans reward military personnel for their service, the program also does not require a minimum credit score.

Home Loan Advice at the Tuttle Group

Deciding between an FHA loan, a VA loan, or another type of loan can confuse the uninitiated. At the Tuttle Group, we consider ourselves your friend in home finance. Our loan officers can help remove the stress of shopping for a loan by making your experience as seamless as possible. We enjoy helping you meet your financial goals and want to become your mortgage partner long after you’ve moved into your new home. Call us or contact us online for help today.

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