The Difference Between a VA Home Loans and FHA Loans

Almost all home loans were conventional loans. Prior to the mortgage melt down and financial crisis, no money home loan were very popular. Very few borrowers would like to apply for FHA or VA home loans if products like 80/20′s didn’t have mortgage insurance.

At the present, the economic outlook is greatly different compared to the past. A 100% financing, as banks realized, were a bad idea when foreclosures started running out of control and home prices fell down. Potential borrowers need to have something at risk. This has really slowed down the housing market, as it is hard for American’s to save up sufficient money for real estate down payments. Qualified borrowers are privileged to still choose from no money down loan options. One of these programs is the VA Home loan.
Veteran’s who want to buy a house should apply for a VA loan. It is one of the few available loans that truly offer 100% financing. You are probably qualified for the VA home loan if you have served active, full time, military service for at least 180 days. The loan program also qualifies the spouses of the deceased veterans.

The VA homeloan is very generous when it comes to debt to income ratios. People can qualify for VA home loans with up to a 50% debt to income ratios. No monthly mortgage insurance is what makes VA home loans different and more affrodable than FHA loans. The upfront mortgage insurance is 2.15%, which is more than FHA loans, but slightly less than USDA rural housing loans. The interest rate for conventional and FHA rates are almost the same.

The veteran’s administration has a different mindset for issuing loans compared to other mortgage programs. The VA home loan aims to help those who serve the country have a home. Other loan programs are very careful that they only give loans to well qualified buyers. Income, employment, and credit requirements are not nearly as strict with VA home loans as they are with FHA and conventional loans.