Insights, Mortgages & Renting

FHA Vs VA Loan

flik eco finance personal fha vs va loan

Making the decision of which mortgage loan to apply for can be difficult. With so many options available on the market, it can be hard to know which one is right for you.

In this article, we will compare FHA loans and VA loans, looking at the advantages and disadvantages of each. By the end, you should have a better understanding of which loan is right for you!

What is an FHA?

An FHA is a type of mortgage loan that is insured by the Federal Housing Administration (FHA). This loan is available to borrowers who are unable to obtain conventional financing due to credit or income issues.

What is a VA Loan?

A VA loan is a home loan that is guaranteed by the U.S. Department of Veterans Affairs (VA). The loan is available to veterans, active-duty service members, and certain reservists and National Guard members.

The VA loan program was created in 1944 to help returning service members purchase homes without the need for a down payment or perfect credit.

What is The Difference Between an FHA and a VA Loan?

FHA and VA loans are both government-backed mortgage options, but there are some key differences between the two programs. For one, FHA loans are available to a wider range of borrowers, including first-time homebuyers and those with lower credit scores. VA loans, on the other hand, are only available to eligible military members and veterans.

Another key difference is the down payment requirements. FHA loans only require a minimum down payment of 3.0%, while VA loans require no down payment at all. This can make VA loans a more attractive option for those who may not have the savings for a traditional down payment.

Finally, it's important to note that FHA loans are not without their drawbacks. One of the biggest is the mortgage insurance premium (MIP), which is required for all FHA loans. This MIP can add hundreds of dollars to your monthly payment, and it's important to factor this into your decision-making process.

What Are The Different Types of FHA?


The most common type of FHA loan is the 203(b) loan, which is also called a traditional FHA loan. With this type of FHA loan, you can purchase a single-family home or multiple units (up to four) with as little as a three percent down payment.


The 203(k) rehabilitation mortgage insurance program is another popular FHA loan, which allows you to finance the purchase price of a home plus the cost of any needed repairs or renovations. There are also special programs for manufactured homes and for condominiums.

What Are The Different Types of VA Loan?

There are three different types of VA loan: the purchase loan, the interest rate reduction refinance loan (IRRRL), and the cash-out refinance loan.

Purchase Loan

The purchase loan is for first-time homebuyers or those who have not owned a home in the past three years. It requires no down payment and no monthly mortgage insurance.


The IRRRL is for homeowners who already have a VA loan and want to refinance to lower their interest rate. It can also be used to convert an adjustable-rate loan to a fixed-rate loan. There is no minimum credit score required and no appraisal is needed.

Cash-out Refinance Loan

The cash-out refinance loan is for homeowners who want to take equity out of their home. It can be used for things like home improvements, debt consolidation, or other expenses. There is no minimum credit score required, but you will need an appraisal to determine the value of your home.

What Are The Advantages of an FHA?

An FHA loan might be a good option if you don’t have the best credit score or a large down payment. Some of the advantages of an FHA loan are:

  • A smaller down payment may be required (as low as three percent)
  • You may be able to get approved with a lower credit score
  • You may be able to get a lower interest rate
  • Your monthly payments could be lower

What Are The Advantages of a VA Loan?

There are a few key advantages that a VA loan has over other types of loans. For one, there is no down payment required. You also don't have to pay for private mortgage insurance, which can add up to quite a bit of money over the life of the loan. Additionally, the interest rates on VA loans are generally lower than those on other types of loans.

What Are The Disadvantages of FHA?

There are a few disadvantages to FHA loans, the most notable being the upfront mortgage insurance premium (MIP). This is a fee that's charged every month, and it can add up over time.

Additionally, FHA loans have stricter credit requirements than conventional loans, which could make it more difficult for some borrowers to qualify.

Finally, FHA loans are only available for purchase loans, so if you're looking to refinance your home, you'll need to explore other options.

What Are The Disadvantages of VA Loan?

There are a few potential disadvantages of VA loan that you should be aware of before you decide if this is the right type of loan for you.

One of the biggest potential drawbacks is that VA loans can take longer to close than other types of loans. This is because there are a few extra steps involved in the process, including getting a Certificate of Eligibility from the VA.

Another potential disadvantage is that you may have to pay for private mortgage insurance (PMI) with a VA loan. This is because the VA guarantees a portion of the loan, but not the entire amount. If you default on your loan, the lender can file a claim with the VA to recoup some of their losses.

Finally, you should be aware that VA loans can have slightly higher interest rates than other loan types. This is because the VA guarantees a portion of the loan, which gives lenders a little more security. However, this difference is usually small and shouldn't have a significant impact on your overall monthly payments.

So, Which One Should You Use?

Now that you know the key differences between FHA and VA loans, it's time to decide which one is right for you. If you're a first-time buyer or have a low credit score, then an FHA loan might be the best option. On the other hand, if you're a veteran or active military member, then a VA loan might be the better choice.

What Are Some Alternatives to Using an FHA or a VA Loan?

There are a few alternatives to using an FHA or VA loan when buying a home.

Conventional Loan

One option is to get a conventional loan. Conventional loans are not backed by the government and typically have stricter requirements than FHA and VA loans.


Another option is to get a USDA loan. USDA loans are available for rural property purchases and do not require a down payment.

Jumbo Loans

Another option is to get a jumbo loan. Jumbo loans are for high-priced homes and typically have higher interest rates than other loan types.

What Are Some Tips For Using an FHA?

If you're thinking of using an FHA loan to buy a house, there are a few things you should know. First, you'll need to have a down payment of at least three percent.

Additionally, your credit score will need to be at least 580 in order to qualify for an FHA loan.

Finally, you'll need to pay private mortgage insurance (PMI) if your down payment is less than 20 percent of the purchase price.

What Are Some Tips For Using a VA Loan?

If you're a veteran looking to take advantage of the VA loan program, there are a few things you should keep in mind.

First, make sure you work with a lender that's familiar with the program and can help you navigate the process.

Second, be aware of the funding fee that's required for all VA loans - this is a one-time charge that's added to your loan balance and can range from 0.50% to as much as three percent of the loan amount, depending on your service history and other factors.

And finally, remember that you'll need to have sufficient income and a good credit score to qualify for a VA loan - just like with any other type of mortgage.

But if you do qualify, you can enjoy the many benefits the VA loan program has to offer, including low interest rates, no down payment requirements, and flexible credit and income guidelines.


About Jermaine Hagan (The Plantsman)

Jermaine Hagan, also known as The Plantsman is the Founder of Flik Eco. Jermaine is the perfect hybrid of personal finance expert and nemophilist. On a mission to make personal finance simple and accessible, Jermaine uses his inside knowledge to help the average Joe, Kwame or Sarah to improve their lives. Before founding Flik Eco, Jermaine managed teams across several large financial companies, including Equifax, Admiral Plc, New Wave Capital & HSBC. He has been featured in several large publications including BBC, The Guardian & The Times.

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