Financing in 30809>Question Details

RS, Home Buyer in Georgia

VA vs FHA loan. What's best if I have 20-30% for a down payment?

Asked by RS, Georgia Sat Nov 12, 2011

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With a 20% down payment, a conventional mortgage is generally going to be the best option. While VA is up to 100% financing, their is a Funding Fee that must be paid. An FHA mortgage requires a 3.5%+ down payment. FHA mortgages also have monthly mortgage insurance that a conventional mortgage under 80% LTV.

Keep in mid that each borrower's siutation is different, so this is only a general answer.
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1 vote Thank Flag Link Sat Nov 12, 2011
If you have that large a down payment your best bet is probably a conventional mortgage. Most people go with FHA or VA loans because they don't have a down payment. Talk to a good local mortgage banker and discuss options with them. If you don't know one, call a local realtor and ask to be referred. They will be happy to help you out. I work extensively with Residential Home Funding here in New Jersey. If you can find a local office, I would highly recommend them. They will go over the various options with you and help you choose the right program for your specific needs.
1 vote Thank Flag Link Sat Nov 12, 2011
Good morning RS....

Just got this question this morning....and without any doubt, conventional is the way to go. Thanks for your service to our country.

Jim
0 votes Thank Flag Link Sun Nov 13, 2011
Forget both the VA and FHA options and talk to a few local lenders about a conventional to see who will offer you the best deal.

Good Luck.
0 votes Thank Flag Link Sun Nov 13, 2011
Thanks everyone, I appreciate the input.
I do have good credit along with the previously mentioned 30% to put down so I'll look into the conventional loans.
0 votes Thank Flag Link Sun Nov 13, 2011
VA vs FHA loan. What's best if I have 20-30% for a down payment?
The short answer is neither. With a down payment of 20% or more you should seek a conventional loan. Best interest rate and NO mi, either upfront or monthly. Also look at a 15 year mortgage. That is the best gift that you can give yourself.

With a 20% down payment, a conventional mortgage is generally going to be the best option. While VA is up to 100% financing, there is a Funding Fee that must be paid the more times that you ues it the higher it is. An FHA mortgage requires a 3.5%+ down payment. FHA mortgages also have an upfront and monthly mortgage insurance that a conventional mortgage under 80% LTV will not have.

Keep in mind that each borrower's situation is different, so this is only a general answer.
0 votes Thank Flag Link Sat Nov 12, 2011
The only reason you might want FHA or VA is if your credit score is low. With VA there is a funding fee but no monthly MIP. With FHA you will pay monthly, plus pay an up-front fee. The monthly MIP fee is now quite high. On a conventional loan, there is an adjustment for scores below 740. Every 20 points you fall below brings another adjustment. You would need to see if the higher interest rate with no MIP would cost you less than the lower rate with the monthly. Even if you put down 20% or more on an FHA loan you have to pay the up-front fee and the monthly for 5 years.
0 votes Thank Flag Link Sat Nov 12, 2011
The answer is neither. With a down payment of 20% or more you should seek a conventional loan.
0 votes Thank Flag Link Sat Nov 12, 2011
Without knowing your particular situation, I would recommend using a Conventional mortgage rather than the VA and/or FHA options, A Conventional mortgage does not require Private Mortgage Insurance when the buyer makes a down payment of 20% or more, whereas the VA and FHA loans carry upfront costs related to federal mortgage insurance.
0 votes Thank Flag Link Sat Nov 12, 2011
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