A federally backed home loan is intended to be used by a borrower who occupies the home as their primary residence. The FHA and VA prohibit investors from using loans to purchase properties with income. A veteran, or a qualifying family member, such as the unmarried widow of a deceased veteran, can get one type of loan initially and the other type of loan for a different property in the future, without having to repay the previous loan. In such a case, the veteran would have both loans at the same time.
The two government-backed loan programs have distinctions. VA loans offer no down payments and are federally guaranteed, while FHA mortgages can be obtained with a 3.5% down payment and are insured through HUD. For both an FHA loan and a VA-backed loan, the home you buy must be the home you will be living in as your primary residence. The most notable requirement of VA loans is that the person be a veteran or active duty service member or a member of the National Guard or Reserve.
A VA loan can also be less expensive in the long term because it doesn't require mortgage insurance and closing costs and interest rates are usually lower compared to FHA or other lending options. Based on everything you've read so far, all the signs definitely point to the VA loan being the best option. But even if you're a veteran or active duty service member, you may be wondering if an FHA or VA loan is better for you. You should also make sure that you choose a lender who knows the ins and outs of the VA lending process.
If you're hoping to buy a home soon but aren't sure if you qualify for a conventional mortgage, it may be worth considering government-backed home loan options, such as a VA loan or an FHA loan. The truth is, if you find a good lender who knows the VA lending process, they'll guide you step by step. When comparing government-backed mortgage programs, the differences between FHA and VA loans are clear. One of the features of the VA repayment loan program that makes it so attractive to eligible borrowers is that a down payment is often not required.
Borrowers who qualify for a VA-backed loan are entitled to a right, which is the amount the VA will pay to a lender if the borrower ends up defaulting on the loan. Since VA loans are only available to eligible veterans or active duty service members, if you don't have a history of service in the military, you most likely don't qualify for a VA loan. Yes, homeowners can have a Federal Housing Administration (FHA) insured loan for one home and a Veterans Affairs (VA) loan for another home at the same time. Understanding how these loans work is important when it comes to using both types of funding at the same time.
These are complex financing situations, and the homeowner must use an experienced FHA or VA lender when financing several loans.