FHA Loans

The Federal Housing Administration was created in 1934 in an effort to bolster homes sales during the Depression. By financially guaranteeing loans, the FHA lifts much of the risk of non-payment and foreclosure from private lenders. It is important to remember that the FHA is not a lender; they just guarantee your loan.

Advantages:

  • Bankruptcy not an automatic disqualification
  • Lower interest rates
  • Down payment is less
  • Lower mortgage points and other closing cost requirements
  • Resale can be made more quickly
  • Is backed by the U.S. government

Features:

  • Down payment required
  • Higher upfront Mortgage Insurance Premium (MIP) than on conventional loans but monthly MIP is lower
  • Loan Limits are lower than conventional
  • MIP required regardless of the Loan-to-Value (LTV)

VA LOAN

A VA loan is a mortgage loan guaranteed by the Veterans Administration. It was created in 1944 and signed into law by President Franklin D. Roosevelt. A VA loan provides veterans and/or their surviving spouses who have not remarried, with a federally guaranteed home with zero down payment. The program has been highly successful and has helped millions of American veterans and their families acquire a home.

Advantages:

  • No down payment
  • VA does not require private MIP
  • Limit on the amount of origination fees and closing costs that the lender can charge
  • Limit also placed on appraisal fees

Features:

  • Borrower with eligibility remaining must have a Certificate of Eligibility from the VA
  • Borrowers are required to make a one-time funding fee based on loan amount and applicant’s service length.
  • Closing costs can be paid by the lender and the seller.
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