FHA loan, or VA, which is the better option?
My husband, and I are looking into purchasing our first home. Unfortunately, our credit is not so good. He is on his way to improving his, and only has a few negative things that can easily be fixed within the next year. My question is should we wait, and get the VA loan, or try for a FHA loan, now with our credit issues. I'm completely clueless about these things, and just looking for some helpful advise
- Anonymous10 years agoBest Answer
FHA and VA loans have basically the same qualifying criteria in regards to financial profile and credit status, so if you are eligible for a VA loan, it is by far the better choice. VA loans do not require a down payment and have no mortgage insurance. VA loans are a gift to our veterans, active duty military and reservists and there is no comparison which is the best route for you. If the previous mortgage person does not know the difference, they should not be in the business.
Ignore when they say that you cannot get an FHA loan without a 620 score, FHA specifically mandates a 580 credit score, not 620 and there are many lenders who do FHA loans with a 580.
See an experienced FHA/VA loan officer and see if you qualify.
- 10 years ago
Do you have to move now? If you don't have to move, then wait out the 12 months to have your credit situation clear up. There is also nothing wrong with trying to qualify now with VA. If you have logical explanations for your husband's credit problems you may get an approval. Aside from the Funding Fee (which you can finance), the VA mortgage is a better mortgage for your monthly payment as it doesn't include any monthly mortgage insurance. Find a VA lender and get yourself pre-approved - go through underwriting to see what they say about your credit situation.Source(s): http://getprequalified.com
- Beverly SLv 710 years ago
FHA loans require a minimum of 620 credit score & no outstanding judgments or collections now. VA is pretty much the same. VA & FHA don't actually make the loans, they just insure them & no lender will make them without a 620 min. score.Source(s): 24 years mortgage lender.
- golferwhoworksLv 710 years ago
It all depends on the scores. Most lenders for both notes require not less than a 620 middle score for all borrowers on the note
I am a mortgage banker in TN
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- kraetschLv 43 years ago
you ought to circulate with the VA mortgage merely because of down charge standards. maximum creditors will prefer to be certain 6 months of expenditures in a mark downs account additionally. regardless of a VA certificates. yet another highway to objective is the NACA software that facilitates first time abode customers.
- ibu guruLv 710 years ago
Clean up your credit. Save up 20% down payment plus closing costs, plus at least 3 - 6 months of reserves.
FHA is broke. We are seeing an extraordinary incidence level of "approved" mortgages not being funded by closing, especially among those with 10% or less cash down payment. The lower your down payment, the greater your risk, and the greater your contract penalties for failing to close on time. Of course, with credit troubles, you are hardly likely to get approved anyway.
- godgedLv 710 years ago
YOur best option is to get clued about these things. A short paragraph on Y!A is not enough to paint the picture for which program is right for you. This is one of the biggest investments you are ever going to make, so sit down with a helpful local mortgage lender, find out what your options are, what you need to do and how to proceed.Source(s): Oregon Realtor