Everything You Need to Know About VA & FHA Loans

Getting a home is an exciting but expensive journey. According to the National Association of Realtors (NAR), average home prices in Dallas County rose 21.4% in just a year. For this reason, many homebuyers choose mortgage options that are easier to qualify for, such as Veterans Affairs (VA) loans or Federal Housing Administration (FHA) loans.

Are you currently in the market for a new home? Here’s everything you need to know about VA and FHA loans.

The Similarities Between VA And FHA Loans

Both FHA and VA are government-backed loans that make the dream of homeownership accessible to low-income buyers.

Since government-backed loans are partially or fully covered if the buyer defaults, lenders are more willing to accept borrowers with high debt-to-income (DTI) ratios or low incomes. 

These versatile loan options allow homebuyers to make small down payments. Unlike conventional mortgage standards, lenders offering government-backed options will accept buyers with credit scores between 580 and 620. 

VA Mortgage Requirements

Before applicants receive approval for VA loans, they must meet specific eligibility requirements. People who may qualify for VA loans include active military service members, national guard personnel, reserve members, veterans, and spouses of service members.

For current or former military members to get VA loans, they must have served in the army for at least 90 days of active duty during a war or 181 days during peace.

Spouses of deceased veterans or active service members who are missing in action may also qualify for a VA loan.

Since the government covers 25% of a loan if the borrower defaults, most applicants must have a credit score of at least 620 to get a VA mortgage. However, some lenders accept applicants with lower credit scores if they make a down payment.

Benefits Of VA Loans

If you are eligible for a VA loan, you do not need to make a down payment on your new home. VA loans also have low-interest rates and are free of mortgage insurance charges, making monthly payments highly affordable.

Homeowners who are eligible to switch from another mortgage to a VA-backed loan can qualify for a cash-out refinance at up to 100% of their home equity. If you qualify for a VA cash-out refinance, you can use the money to pay down debts or fund expenses such as a home remodeling project.

FHA Loan Requirements

Citizens with no connection to the military can also find affordable mortgage options.

FHA loans allow homebuyers to make a down payment of as little as 3.5% on their dream homes. 

While buyers with a credit score of at least 580 can enjoy a 3.5% down payment, families or individuals with even lower credit scores are not out of luck. Homebuyers with a FICO score as low as 500 may still qualify for a loan with a 10% down payment.

Conventional loans often include private mortgage insurance (PMI) charges if a borrower makes a down payment smaller than 20%. On a similar note, FHA loans require mortgage insurance premium (MIP) payments to protect lenders if borrowers default on their loans.

Unlike PMI on conventional loans, you cannot cancel your MIP payments.

If you want to avoid MIP fees, you must make a down payment of at least 10%.

To qualify for an FHA loan, an FHA-specific home appraisal is necessary. The standards that the Department of Housing and Urban Development (HUD) set for home and property quality will make or break eligibility.

An FHA appraisal determines whether or not the house you are considering is safe and up-to-date.

Perks Of FHA Loans

While each lender varies on exact requirements, FHA loans are one of the most accessible mortgage plans for low-income buyers.

While VA loans are highly beneficial for military members, FHA mortgages are an alternative for citizens.

If you have a low income, or a high DTI ratio that prevents you from qualifying for a conventional loan, you can explore FHA mortgages instead. If your DTI ratio is 43% or lower, you might be eligible for this type of loan.

First-time homebuyers or repeat buyers who do not have a lot of savings can often purchase a house with an FHA loan.


Homeownership does not need to be a distant dream if you are tired of renting. FHA and VA loans can help you achieve your goal of having your own house.

At Supreme Lending, we specialize in helping homebuyers across the country get affordable loans. Find the best mortgage option for your unique situation here.

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