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How Do VA Loans Differ From Other Mortgages?

It is important to know the difference between VA, FHA, and conventional loans when looking for a home mortgage. These loans are similar since they are issued by banks and other approved lenders.

However, some differences exist between them. In this article, we will shed light on the differences that exist between VA loans and other mortgages.

Conventional Mortgages

Unlike VA and FHA loans, conventional loans are not insured by the Federal government. This implies that conventional loans do not carry guarantees for the lender if the borrower fails to repay the loan.

Thus, you will be required to pay for private mortgage insurance when you make less than a 20% down payment on a property when applying for a conventional loan. When you fail to repay the loan, the mortgage insurance company will ensure that the lender is paid in full.

Conventional loans can be categorized into conforming and non-conforming loans. Conforming loans must meet the guidelines set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. These loans can be accessed by everyone; however, they are more difficult to qualify for than FHA and VA loans.

Conventional loans are riskier for the lender and the income requirements are stricter than VA and FHA loans (since conventional loans have no government insurance).

In order to be approved for a conventional conforming mortgage, you need to:

  • Have good credit

  • Have a reliable and steady source of income, and

  • Be able to afford the down payment.

FHA Loans

FHA loans are insured by the Federal Housing Administration (FHA). If borrowers default on the loan and the value of their homes is not enough to cover the debt, the lender will be compensated by FHA for the loss.

Since the loan is insured, the lender can offer good terms such as low down payments. FHA loans are easier to qualify for than conventional loans. Also, anyone can apply for FHA loans. You might be eligible for an FHA loan if you have a credit score that’s as low as 500, however, most lenders require a minimum score of 620. Lower credit scores could result in higher down payment requirements. FHA loans have maximum loan limits that are determined by the average cost of the property in a particular area.

Borrowers will also be required to pay a mortgage insurance premium as part of an FHA loan.

VA Loans

VA loans are guaranteed by the Veterans’ Association (VA). Unlike FHA and conventional loans, VA loans are only available to some specific group of borrowers via VA-approved lenders. Since the loan is guaranteed by the Veterans’ Association, the lender is protected from loss whenever the borrower fails to repay.

The following conditions must be met in order to get a VA loan:

  • You must be a current member of the US armed forces

  • You must be a national guard member

  • You must be a veteran, or

  • You must be the spouse of someone that is eligible for a VA loan.

VA mortgage does not require any private mortgage insurance. The loans can also be guaranteed without any money down. Borrowers will, however, need to pay a funding fee (which is a one-time charge that’s between 1.25% and 3.3% of the amount that is being borrowed).


Choosing the right mortgage that aligns with your specific need can be challenging. Get in touch with us to figure out the type of loan that’s suitable for your circumstance. Our service will help you make financial decisions confidently.

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