FHA is a really good program, especially for first time home buyers. The program is designed to help people transition from being a renter to being a homeowner by requiring as little as 3.5 percent down and by allowing most of your closing costs and fees to be wrapped into the loan.
The VA’s home loan program is also really good. It allows you to have no down payment and the closing costs can be paid by the seller. There is a funding fee however, but if you have a service related disability of 10 percent or more, then you don’t have to pay that fee.
So if FHA went head-to-head with VA, which would win?
It all depends on the person they’re fighting for, but in most cases if you’re a Veteran, the VA will be your best bet.
Here’s an example of a situation that recently happened in our office. A borrower had been pushed to go with an FHA loan, so he came to us. We found out that he was receiving compensation for a service related disability, this meant that he was exempt from any fees that the VA would normally charge. If he had gone with an FHA loan, he would have had to pay upfront mortgage insurance and a monthly mortgage insurance. He would have been stuck with $212 a month in mortgage insurance or approximately $76,000 over the entire life of the loan. But since he went VA, he had no funding fees, needed no down payment, and no monthly mortgage insurance.
In this case the VA won by knockout!
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