FHA Loans and VA Loans- Explanation, including streamlining your refinancing.
There are several benefits to obtaining an FHA or a VA loan. FHA loans generally involve lower down payment and credit score requirements. VA loans are available to certain service members and veterans and, for no-cash out refinancing, can be streamlined by waiving certain types of documentation, such as income, employment verification and home appraisals.
What is an FHA loan?
An FHA loan is a home loan backed by the US government’s Federal Housing Administration to make home buying more accessible to people with lower incomes and credit scores. Since these loans are insured by the government, private lenders and banks are more willing to offer these mortgage loans to people that qualify.
What is a VA loan?
A VA loan stands for Department of Veterans Affairs mortgages. A VA loan is a loan for service members who currently serve on active duty or veterans who have been honorably discharged. The program was created in 1944 to help returning service members purchase homes after WWII.
How our FHA and VA loans work.
Your Mariner Finance mortgage loan officer will explain the process and typically request basic documents to get the process started. But the documentation required may vary depending on your specific situation and your specific loan. Most refinance loans close in 45 days or less*.
Basic documentation can include (but is not limited to) copies of your last 2 years’ W2’s and signed/dated Federal Tax Returns, last 2 consecutive paystubs, driver’s license, social security card, most recent mortgage statement, homeowners insurance declarations page and last 2 months’ bank statements.
*Loan closing is subject to various factors including, but not limited to, applicable lender underwriting requirements, market conditions, state-specific regulations, timely submission of all information and completion of documentation requirements.
Frequently asked questions
What is the difference between FHA loans vs. conventional loans?
The FHA, or the Federal Housing Administration, insures loans within certain parameters and through certain lenders, while conventional mortgages are not backed by any federal agency. Conventional mortgages are available from just about any lender, such as a mortgage company or a bank. FHA loans are available only from FHA-approved lenders.
What is the difference between VA loans vs. conventional loans?
VA loans are only available for service members, veterans and surviving spouses who meet certain eligibility requirements. Conventional loans are for anyone who can qualify, are not restricted by your military status and are not backed by any government agency.
Is it hard to get an FHA home loan?
There is a process that must be followed for FHA loans, but FHA loans normally are more flexible when it comes to debt-to-income ratios. Also FHA loans require a lower down payment, typically between 3.5 percent and 10 percent of the purchase price. Conventional home loans typically impose stricter debt-to-income ratios and require higher down payments, with 20 percent down payment being the standard. Higher or lower variations in mortgage interest rates may occur based on your credit history and income.
FHA and conventional loans also differ based on the qualifications of the borrower.
Qualifications for the FHA mortgages start with a credit score as low as 500. Borrowers with scores over 580 typically receive better terms and interest rate. Conventional mortgage lenders typically require a credit score of 620 or higher.
Which mortgage should I go with, FHA or conventional?
FHA mortgages typically have a 30-year term, but that can vary depending on your specific needs. Each monthly payment puts money towards the loan amount, interest, real estate taxes, and mortgage insurance. Your loan officer will work with you to determine a payment that is right for you.
Conventional loans can have an adjustable rate. With an adjustable rate, your interest rate usually is lower at the beginning of the loan, and then will change – and can become higher –during the life of the loan. This means your payments might start out lower but might increase over the term of your loan. Your loan officer can give you more details on these pricing options.
Is a VA loan better than a conventional loan?
VA loans can have some obvious perks like no down payment required, no mortgage insurance and typically lower interest rates. In some cases no credit score is required. However, VA loans will have a funding fee. This fee may be added to the loan amount, which means you won’t have to pay it a loan closing. However, rolling it into the loan amount will make your loan payments higher.
It’s important to note you can only purchase a primary home as a property type with a VA loan. With a conventional loan, you can purchase primary, second or investment homes.
Can I have an FHA and VA loan?
Yes, it is possible to obtain an FHA loan and a VA loan at the same time. However, having an FHA loan may make it more difficult to obtain a VA loan since most lenders do look at your debt-to-income ratio.
What is the purpose of FHA insurance?
FHA loans require the borrower to pay for mortgage insurance to protect lenders from losses incurred because of defaults on FHA loans. Mortgage insurance premiums are required when down payments are less than 20% of the home’s appraised value. If mortgage insurance is required, it will stay part of the loan until the loan is paid off.
Are FHA loans only for first-time buyers?
FHA loans are not specifically only for first time home buyers. First-time buyers, however, can be attracted to FHA loans because of the smaller down payment feature.
Where do I find an FHA mortgage lender?
Fannie Mae is a leading source of financing for mortgage lenders. HUD is the government agency that administers FHA loans. Both of their websites have search tools to find mortgage lenders.
However, we do assist borrowers with FHA loans, and you can apply here at Mariner Finance.
Where do I find a VA mortgage lender?
You can get a VA loan from many private lenders and Mariner Finance assists borrowers with VA loans. Click to apply online here at Mariner Finance.
Why apply at Mariner Finance?
Our experienced and licensed loan officers make it their business to educate customers and create loan solutions that fit the individual. Their mission is to make the process simpler, not the other way around. Because the more informed you are, the better decisions you make—not just today, but years from now as your needs change.
We love Mariner Finance. They have always been there when we need them. We love the ladies in the office. Thank you Mariner!
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