The federal government rewards veterans of the US military in several ways. Many programs, from education reimbursement to disability compensation, employment services and life insurance are available to active and former members of the armed forces. Another benefit of military service is home loan assistance in the form of the VA Loan.
Of the 23 million+ living veterans, less than 10% have used the this benefit provided to them.
If you are a veteran, member of the active military or even the surviving or current spouse of a veteran, you may be in need of more information about the two most popular government-backed loans available to you today. These loans are the VA Loan & the FHA loan. Buying a home or refinancing is a big decision, so it’s best to be fully informed.
VA Loans vs FHA Loans
* VA Loans are almost identical to most conventional loans, only they offer many extra benefits such as: no down payment requirements, lower qualifying credit scores and loan fees can be packaged into the mortgage.
* FHA Loans are a popular option among many non-veterans. Easy refinancing, more lenient qualifying credit criteria and low down payment requirements attract many people who may not otherwise qualify for a conventional mortgage.
* VA Loans have eligibility requirements that must be met before a veteran or active military member can be approved for the loan. A certificate of eligibility will be issued to qualified persons and will include an entitlement amount (the portion of the mortgage that the VA will guarantee for each service person). The VA can issue the eligibility certificates or your mortgage lender can obtain a certificate for you.
* Almost anybody can get an FHA loan. There are no income limits, however there are limits on how much you can borrow. VA Loans have limits as well, but they are available up to $729,000 in most areas.
* Loans for veterans don’t require you to pay private mortgage insurance (PMI). FHA loans require you to pay the government equivalent of PMI, called MIP (mortgage insurance premium). Getting a VA loan allows you to avoid this extra expense.
If you’re a qualifying member of the military, a VA loan is a great way to take advantage of today’s low mortgage rates. Many people aren’t sure if they want to deal with the perceived hassle of a loan for a veteran. If you are a veteran with no available VA entitlement, FHA loans can make a lot of sense. Whichever option you choose, make sure you work with a trusted mortgage lender in order to lock in a competitive rate.