Which type of loan is better for a first time home buyer. An FHA loan or a VA loan?

Asked by D, Minnetonka, MN Wed Mar 25, 2009

What are the pro's and con's to both or what makes one better than the other.

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Josh Lund, , Minneapolis, MN
Fri Jul 17, 2015
Hello D,
Good morning.
FHA and VA are both great loan products. 1st off in order to do a VA loan you have to be a veteran or a spouse of a veteran. On a FHA you need 3.5% of the loan amount as a down payment. There are many other things that are great about both loan programs. Lets talk about them both, and maybe even other loan products that could help you. Are you still in the market to buy a home? If so, I would love to see if we can help you out. We work with 1st time home buyers all the time. Do you have a realtor yet? If not we have preferred ones we can get you in contact with. I would like to see if I can help you out with a home mortgage. I will try and make this a very easy process. Please let me know how to help out.
Thanks much.
Josh Lund
MN District Branch Manager
NMLS # 387408
Gold Star Financial Group
Mobile: 612.802.3265
Office: 952.884.5442
eFax: 877.666.0007
jlund@goldstarfinancial.com
0 votes
Brian Martuc…, Mortgage Broker Or Lender, Bethesda, MD
Sat Feb 28, 2015
Are you a veteran? If so going with a VA loan may be your best bet. There is a rather large VA Funding Fee, but its cheaper than the FHA Mortgage Insurance (MI) over the long haul because VA has no monthly MI payment, where FHA has a monthly MI payment. For the VA Funding Fee numbers see:

http://benefits.va.gov/stpaul/images/FundingFeeCard.pdf

And one bit of advice, I'd stay away from taking mortgage advice from a realtor. Its frequently wrong, or out of date, or only being offered because they want to work with you on your real estate purchase, or if they are out of your area they want to refer you to a realtor they know in your area for a referral fee. Stay away from that at all costs. Do your own homework and pick your own realtor, who won't have to pay anyone a referral fee.

As far as VA being more liberal in underwriting guidelines, that is not necessarily true. FHA is very liberal on underwriting.

Choose a lender, work with them, get pre-qualified, and have them show you #'s side by side to help you make a decision.
0 votes
Jessica Bate…, Agent, Beverly Hills, CA
Tue Jul 30, 2013
VA is better, no down payment or PMI - FHA allows for more wiggle room if you have credit issues there are lenders that go down to a 580. The Lenders Network has a few mortgage companies they work with I would recommend.
0 votes
Jennifer Kir…, Agent, Minneapolis, MN
Wed Mar 25, 2009
Well, VA is great, but only if you are VA eligible, which means you have to be a Veteran or Active Military. There is a VA Funding Fee of which you will be responsible for, but it can be wrapped into the loan. If you put a downpayment of at least 5%, the Funding Fee is reduced. The current fee is 2.15% of the loan for first time VA loan borrowers. For second time users it is 3.3%. Having been a military wife, I have worked with VA loans not only for my family, but clients as well. The best part of a VA loan is that you can still do 100% financing.

You can learn about VA loans more at: http://www.homeloans.va.gov/eligibility.htm

FHA is a good program also, but you will have to bring some money to the table, at least 3.5% of the purchase price, but you can wrap some of your closing costs into the loan.

You can learn more about FHA loans at: http://www.hud.gov/buying/loans.cfm

Hope this helps!
0 votes
Aaron Dickin…, Agent, Champlin, MN
Wed Mar 25, 2009
VA all the way. 0% down, no upfront MIP, can be assumed (with conditions).

If you want more or want to talk about it, give me a call. 612-251-5599 I'm a Realtor not a lender but I know things!
0 votes
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