VA Loan Advantages vs. FHA Loans
VA loans and FHA loans are both backed by the United States government. Although there are many similarities between the two, VA loans offer some distinct advantages when compared to FHA loans.
These distinct advantages include no down payment requirements, no Mortgage Insurance Premium (MIP) added to your monthly payment, easier credit qualifying, higher debt-to-income (DTI) ratios, and increased loan limits as compared to a FHA loan.
VA Loan Advantages:
- No down payment requirements
- No Mortgage Insurance Premium (MIP) added to your monthly payment
- Easier credit qualifying, 580 beginning score
- Higher debt-to-income (DTI) ratios
- Increased loan limits as compared to a FHA loan
No Down Payment for VA Loans
One of the biggest differences between VA loans and FHA loans is down payment requirements. FHA Loans require a minimum down payment equal to 3.5% of the sales price. VA loans do not require a down payment at all. Saving up for a big down payment can be a difficult task for military personnel, who are constantly moving around the country. Building credit is also more difficult. A government Guaranteed VA Home Loan is easier to obtain than other types of loans, because you can finance 100% of the purchase price.
No Monthly Mortgage Insurance Premium (MIP)
VA loans never include monthly mortgage insurance premiums, which saves you money each and every month. Most other loans, including FHA require MIP. If you qualify for a VA loan, it would not make sense to pay the monthly expense of MIP on a FHA loan. Another great feature is the VA will allow the seller to pay your closing costs, allowing you to possibly purchase a home with no real out-of-pocket expense.
Increased Loan Limits
A major benefit to veterans is increased loan limits available due to the passage of the Economic Recovery of 2008. As a result of this bill that was passed in an attempt to stimulate the real estate industry, larger loan amounts were made available for VA home-buyers.
The standard limit is set at $484,350, but in many higher cost areas these limits have been increased. FHA loan limits are based on the median sales price of the county the property is located in, and as a result the limits are much lower in most areas. You can get more house for less money out-of-pocket with a VA loan due to the more flexible loan limits!
Get Started Today With Your VA Loan Request!
To speak with Chris or one of his team of VA Home Loan specialists about taking the next step toward prequalification, call us at 866-704-2826 or complete our quick-and-easy request form. We'll be happy to contact you and discuss your next steps.
We look forward to assisting you.
By submitting your request, you are not obligating yourself. You are simply asking to be contacted by one of our talented specialists who can answer your questions. Florida Veterans Home Loans works exclusively with military families and we have helped people all across Florida understand the VA loan process.