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FHA Loan vs VA Home Loans

The FHA Loan is a mortgage option that, like the VA Loan, is guaranteed by the federal government. With the Federal Housing Administration backing a portion of each loan, applicants typically find an easier time qualifying for this mortgage option.

The popularity behind the FHA Loan stems from not only the lenient qualification standards, but the low down payment requirement of at least 3.5%. However, veteran and military homebuyers will find that the VA Loan offers similar qualification standards and no required down payment, as well as fewer fees associated with the mortgage - stemming from the lack of monthly mortgage insurance premiums.

Other key facts about FHA Loans include:

  • FHA Loans require a minimum down payment of 3.5%
  • The home you intend to purchase must be your primary residence
  • FHA loan requires that a property meet certain minimum standards at appraisal
  • The FHA allows home sellers, builders and lenders to pay some or the entire borrower’s closing costs
  • Loan limits, terms, insurance requirements and fees are occasionally updated. Keep up with these changes by using the Department of Housing and Urban Development (HUD) website

FHA Loans are often the loan of last resort, as they have the highest monthly mortgage insurance costs which last the duration of the mortgage. However, the FHA Loan is a great option for those working to improve their credit score without needing a large down payment.

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