Home Buying in Queens>Question Details

Ealmanzar27, Home Buyer in Queens, NY

Which loan is better, an FHA loan or a VA loan? How long does it usually take to close a VA approved loan?

Asked by Ealmanzar27, Queens, NY Wed Oct 31, 2012

Im going to be deployed in a couple of months and I am looking at the option to purchasing a home for my wife and kids in Queens NY so that they are close to family. This is a last minute dicision therefore I have not had plenty of time to save up. I can cover closing cost but I want to opt for no money down, I'm not sure how much does a VA loan can go up to but my credit is ok.

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Understanding the differences between conventional, FHA and VA loans can help you decide which loan program will best meet your needs. All three types of loans are issued by banks and other approved lenders, but FHA and VA loans are backed by the government, while conventional loans are not. Each type of loan has other distinct characteristics. Let’s take a look.

>VA loans are great for borrowers of limited income, with no cash reserves and with average or lower credit scores.
>FHA loans are best for borrowers with limited cash reserves and/or average credit.
>Conventional loans are best for borrowers who have great credit scores and a down payment equal to at least 20% – the combination that garners the lowest possible interest rates.

VA loans typically take a few weeks longer to close since the appraisals are ordered through the VA and they have been on a 3 week turn time recently.

The Many Advantages Of VA Loans - http://www.benefits.va.gov/BENEFITS/benefits-summary/Summary…

3 votes Thank Flag Link Tue May 5, 2015
The Federal Housing Administration (FHA) runs several programs to promote home ownership. In most cases, FHA loans are mortgages obtained with the help of the FHA. With a small down payment, buyers can purchase a home. FHA loans make it easier for people to qualify for a mortgage, but they’re not for everybody.

> What is an FHA Loan?

An FHA loan is a loan insured against default by the FHA. In other words, the FHA guarantees that a lender won’t have to write off a loan if the borrower defaults – the FHA will pay. Because of this guarantee, lenders are willing to make large mortgage loans.

> Who Can Get an FHA Loan?

Almost anybody can get an FHA loan. There are no income limits – like you may find with first time home buyer programs. However, there are limits on how much you can borrow. In general, you’re limited to relatively small mortgage loans relative to home prices in your area. To find the limits in your region, visit HUD’s Website.

To qualify for an FHA loan, you’ll need to have reasonable debt to income ratios. In general, you have to be better than 29/41. In addition, you have to have decent credit. You don’t need wonderful credit to get an FHA loan; it just needs to be decent.

> Why are FHA Loans so Great?

FHA loans are not for everybody. Nevertheless, they are a great help to some borrowers. FHA loans allow people to buy a home with a down payment as small as 3%. Other loans might not allow such a low down payment.

> FHA loans offer a few other bells and whistles:

* Easier to use gifts for down payment and closing costs
* No prepayment penalty (a big plus for subprime borrowers)
* An FHA loan may be assumable
* Possible leniency during financial hard times

> How do FHA Loans Work?

The FHA promises to pay lenders if a borrower defaults on an FHA loan. To fund this obligation, the FHA charges borrowers a fee. Home buyers who use FHA loans pay an upfront mortgage insurance premium (MIP) of 1.5%. They also pay a small ongoing fee with each monthly payment.

If a borrower defaults on an FHA loan, the FHA uses collected insurance premiums to pay off the mortgage.

> When is an FHA Loan better to use than a VA Home Loan?

Currently, FHA loans can now be made up to $ 725,000 in some areas. WIth VA Loans, the maximum loan amount is typcially $ 417,000 except for Hawaii. So if you need a loan more than $ 417,000, then it’s wise to go FHA

With FHA, you pay that darn Mortgage Insurance Premium (MIP) and with VA you do not pay that fee. So it saves you money to go with VA.

Also, VA Loans offer 100% financing with no down payment. FHA requires a 3% down payment. So that’s a big difference right?

Now, in some market conditions, FHA may have the better interest rate and so that has to be taken into consideration. But mostly, if your a U.S. Veteran, it more than likely that the best loan for you is a VA Loan. As always, you should compare offers for VA and FHA loans against each other.

> http://valoanguidelines.org/
2 votes Thank Flag Link Fri May 15, 2015
"Both FHA and VA have up front fees that are added to the loan amount, while conventional loans do not.

They also require less of a down payment than conventional loans, zero for VA and they have less expensive mortgage insurance than conventional loans greater than 80% LTV, again FHA has zero.

The government options are usually a better choice unless one plans on putting down 20% or more, then I would usually suggest the conventional loan."

The Federal Housing Administration (FHA) Advantages: http://fhamortgageinfo.com/fha-loan-vs-va-loan/
1 vote Thank Flag Link Fri May 22, 2015
Also, the VA loan does not require MI (Mortgage Insurance). This is very expensive compared to an FHA loan. Again, it's about what you qualify for and what's the better fit financially for you.
1 vote Thank Flag Link Wed Oct 31, 2012
Compensating Factors to over turn a Kentucky VA Loan Mortgage Denial
Compensating factors may affect the loan decision for a Kentucky VA Mortgage. These factors are especially important when reviewing loans which are marginal with respect to residual income or debt-to-income ratio. They cannot be used to compensate for unsatisfactory credit.
Valid compensating factors to over turn a Kentucky VA Mortgage loandenial should represent unusual strengths rather than mere satisfaction of basic program requirements. For example, the fact that an applicant has sufficient assets for closing purposes, or meets the residual income guideline, is not a compensating factor.
Valid compensating factors should logically be able to compensate (to some extent) for the identified weakness in the loan. For example, significant liquid assets may compensate for a residual income shortfall whereas long-term employment would not.
Compensating factors include, but are not limited to the following:

· excellent credit history,

· conservative use of consumer credit,

· minimal consumer debt,

· long-term employment,

· significant liquid assets,

· sizable downpayment,

· the existence of equity in refinancing loans,

· little or no increase in shelter expense,

· military benefits,

· satisfactory homeownership experience,

· high residual income,

· low debt-to-income ratio,

· tax credits for child care, and

· tax benefits of home ownership.

If you looking to get approved for a Kentucky VA Mortgage, give us a call today. We can go down to 640 credit scores for VA loans in Kentucky, and the maximum debt to income ratio on some cases can go as high as 50% with the above compensating factors.
0 votes Thank Flag Link Wed May 8, 2013
A VA loan is better because it require no down payment, has no monthly mortgage insurance, and generally takes about 30 days to close.
0 votes Thank Flag Link Sat Apr 27, 2013
Dear Ealmanzar27,
If you are qualified for VA and you are able to get the certificate then VA is defiantly the way to go. You don't need any money down and you can finance all of your closing cost as well that means $0 out of pocket. Another big advantage is that VA does not require mortgage insurance like FHA, that saves you aprox $350 per month on a $350,000 home. Big savings!!!
Give me a call, I have a very large inventory of homes in Queens.
Best of luck!
Isaac Benshabat/Lic Real Estate Broker
Best Buy Homes
0 votes Thank Flag Link Thu Nov 8, 2012
Both are great loans. If you are eligible for a VA loan then that is probably the best option for you since you can put 0% down and can possibly finance 4% of your closing costs. You also will save a few hundred bucks per month since you won't have any mortgage insurance. Minimum credit score is 640 for both programs. VA loans typically take a few weeks longer to close since the appraisals are ordered through the VA and they have been on a 3 week turn time recently.
0 votes Thank Flag Link Wed Oct 31, 2012
First I'd like to say thank you, and wish you the very best overseas.

In reality there is no such thing as "the better loan". It's a matter of what loan program is the best fit for you and your family. In your case, if you're limited as to the money you have available towards the purchase, you more than likely will be better off with a VA loan. Some veterans approve for 100% financing, others don't. Meeting face-to-face with a Loan Officer is the best way to find out what your situation is. You must obtain a certificate of eligibility which will indicate what VA financing you'll qualify for, they'll also need to review your credit, income documentation and assets. Your spouse can also go in the loan, not sure if that's something you've considered or not.

If you're looking for a Loan Officer, I'm always available to meet face-to-face in one of our Queens branches. Good luck!

Javier Meneses
NMLS #23130
Senior Loan Officer
Sterling National Bank
(516) 606-9648
0 votes Thank Flag Link Wed Oct 31, 2012
What is better for one Buyer, may not be better for another; too many variables:
Both FHA and VA have benefits; do the bene's fit your needs?
FHA is a 3 1/2% down
VA is No Down
VA is probably a higher Interest Rate.
VA requires a FUNDING FEE, (about 2 1/4%), which takes some of the wind out of the No Down feature.

You might try applying for both, and then compare the GFE's (Good Faith Estimate) to see the numbers, side-by-side, to see the difference.

For the VA, you might try the Navy Federal Credit Union: You don't have to be in the Navy, (although I would think better of you, if you were,) they take all 4 services.

Good luck over there; may God watch over you.
And thank you for serving.
0 votes Thank Flag Link Wed Oct 31, 2012
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