Provided for informational purposes only and subject to change. These represent common eligibility requirements across the industry for VA and FHA loans. Strong Home Mortgage eligibility requirements may differ. Contact a loan officer to discuss.

I. Mortgage Insurance

An FHA Loan doesn’t require private mortgage insurance, but instead requires an upfront and annual Mortgage Insurance Premium (MIP). This is required for FHA loans regardless of your credit score or the down payment amount. A VA loan doesn’t have an upfront or annual MIP, but there’s a one-time funding fee paid to the US Department of Veteran Affairs that supports the VA loan program.

Variables

Mortgage Insurance Premiums and the VA Funding Fee can vary based on several factors. Contact a loan officer to learn more, FHA vs VA loan.

Bottom Line

The upfront MIP fee on an FHA loan may be slightly lower when compared to VA’s upfront funding fee for loans with small down payments. However, unlike an FHA loan, a VA loan doesn’t have a recurring, annual MIP cost. This may make it a more attractive option, depending on how long you plan to stay in the home. This makes for a key distinction, FHA vs VA loan.

II. Down Payment

A VA loan may not require a down payment. An FHA loan requires a down payment of at least 3.5%. Both allow for gift funds to be used toward the down payment and closing costs, FHA vs VA loan, so long as the funding source is closely-related to you.

Variables

If you have remaining entitlement for your VA loan, then make sure to verify the current VA loan limits and how they may affect the amount of money you can borrow without a down payment. For example, if the purchase price exceeds the reasonable value of the property on a VA loan, then a down payment will be required. There may be other instances where a down payment is required for a VA loans.

Bottom Line

VA loans may be available with a zero-down payment while the minimum down payment option on FHA loans is 3.5%.

III. Credit Score

For those opting to place the minimum 3.5% down payment, an FHA loan typically requires a 580 minimum credit score.¹ The credit score requirements for VA loans vary based on several factors. Generally, you’ll need a minimum credit score of 580.

Variables

Down payment size, cash reserves, and other factors can affect credit score requirements, FHA vs VA loan.

Bottom Line

Contact a loan officer to help determine your eligibility, FHA vs VA loan.

IV. Interest Rates

Each option offers competitive rates, FHA vs VA loan. Your specific interest rate will depend on several factors including credit score, loan duration, and loan type.

Variables

Be sure to compare the annual percentage rate (APR) for each loan type. The APR is the cost you pay each year to borrow money, including fees, expressed as a percentage. For example, APR includes mortgage insurance premiums for FHA loans and the VA funding fee for VA loans.

Bottom Line

VA loans tend to have a slightly lower interest rates but be sure to compare the APR before deciding which is the best fit for you.

V. Streamline Refinancing

If you currently have an FHA or VA loan, you may qualify for a streamline refinance. A streamline refinance is designed to simplify the refinance process for an existing borrower, FHA vs VA loan.

Generally Not Required for a VA or FHA Streamline Refinance

• No appraisal
• No income verification
• No credit check

Generally required for an FHA Streamline Refinance

• A history of on-time mortgage payments (six months)
• Must wait 210 days from your last refinance
• Must demonstrate a clear and tangible benefit (usually a rate reduction of 0.5% is required)

Generally required for a VA Streamline Refinance

• Certify the home was previously or is currently occupied by you
• Show a reduction in mortgage payment because of the refinance (except when it’s an ARM to a fixed-rate mortgage)
• A history of on-time mortgage payments (six months)
• Must wait 210 days from your last refinance

Additional Benefits of an FHA Streamline Refinance

• Potential partial refund of pre-paid mortgage insurance via a MIP discount on the new refinance.
• If you obtained an FHA mortgage between 2010 and 2015, then you could receive today’s lower annual mortgage insurance premiums.

This gives you a summary of what is and isn’t required for streamline refinancing, FHA vs VA loan.

Variables

Streamline refinancing is only available if you’re refinancing the same loan type, FHA vs VA loan. For example, you must be refinancing an existing FHA loan to qualify for an FHA streamline refinance.

Bottom Line

Both VA and FHA offer an attractive streamline refinance option.

VI. In Closing

A VA loan may offer benefits that exceed those available for an FHA loan. Both loan types have different requirements. Consult a loan officer to learn more about the differences, FHA vs VA loan.

Ready to explore your options, FHA vs. VA loan?

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¹Strong Home Mortgage currently offers FHA loans to customers with a credit score of 600 or higher.