If you’re looking to purchase a home, chances are you’re going to consider various mortgage options. And sometimes, those options and their benefits can start to blend together. This is often the case with a VA loan and an FHA loan. Though both are government-sponsored mortgage programs, their similarities pretty much end there.

Check out this side-by-side comparison of how the advantages and requirements of a VA loan and an FHA loan stack up against each other. 

 VA Loan

FHA Loan

Who’s Eligible?

  • Requires you to be part of the military at some point during your career.
  • Active-duty personnel, veterans, reservists, National Guard members, or surviving spouses are generally eligible.
  • Anyone can qualify for an FHA loan, military member or not.

Down Payment Requirement?

  • No down payment is required as long as the loan amount does not exceed the loan limit for the county or the sales price does not exceed the appraised value.
  • 3.5% is the minimum down payment required.

Minimum Credit Score Allowed?

  • Minimum credit score varies among lenders, but typically you’ll need at least a 620 score to qualify.
  • A credit score of 580 or above will qualify you for the 3.5% down payment.
  • Less than a 580 credit score means you’ll have to put at least 10% down.

Do I Need Mortgage Insurance?

  • Nope. Awesome, right?
  • Yes, first there’s an upfront premium, which is 1.75% of the loan.
  • Next is the annual premium (paid monthly), and varies based on length of loan, loan amount, and initial loan-to-value ratio. 

Any Closing Costs Flexibility?

  • If agreed upon, the seller can pay the closing costs, up to 4% of the home price.
  • Some of your closing costs may be financed, and some can be paid by the seller, within certain boundaries.

What Are My Refinancing Options?

  • With the VA streamline refinance, appraisals and credit checks are not required. And there are no out-of-pocket closing costs.
  • A VA cash-out allows you to refi up to 100% of the appraised value.   
  • You can refi up to 97.75% of the home’s value (or have at least 2.25% in equity).
  • Can do a cash-out refi with as little as 15% equity.

 Pretty different options, right? With this side-by-side, now you can properly compare a VA loan to an FHA loan — and have a clear idea which of these loans is right for your situation. But if you want even more home loans to consider, take a look at our home loan options page here.

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