Whether you are just starting your home search or are an experienced home buyer, you have probably heard the terms FHA, VA and Conventional in references to mortgage loans.  I wanted to write this blog to help you understand what each of these is and talk about the pros and cons of each mortgage loan type as this can be rather confusing.

1. VA
   • What it is:
     • A loan designed for veterans and active-duty service members who obtain a Certificate of Eligibility from the VA
   • Pros:
     • No down payment required
     • No up-front closing costs
     • More relaxed qualification requirements compared to a conventional loan
   • Cons:
     • If you are buying a condo, the condo complex must be VA approved
       • If you are interested in buy a condo and want to find out if the complex is VA approved, give us a call or shoot us an email and we can check for you
     • There is an additional cost known as a VA Funding Fee
       • This can be paid at closing or rolled into the loan
     • VA appraisals are more strict than a typical appraisal
       • The home must be in livable condition and have all of the built-in appliances in place
2. FHA
   • What it is:
     • A loan designed for buyers who are looking to buy a home with a small down payment.  The Federal Housing Administration (FHA) insures the loan so your lender can offer you a better deal.
   • Pros:
     • You only need 3.5% of the purchase price as a down payment
     • More relaxed qualification requirements compared to a conventional loan
   • Cons:
     • If you are buying a condo, the condo complex must be FHA approved like it does with a VA loan
       • If you are interested in buy a condo and want to find out if the complex is FHA approved, give us a call or shoot us an email and we can check for you
     • Like VA appraisals, FHA appraisals are more strict than a typical appraisal
       • The home must be in livable condition and have all of the built-in appliances in place
     • On any loan (other than VA) with less than 20% down, you are required to pay a Mortgage Insurance Premium (MIP)
       • There is an up front fee of 1% of the purchase price as well as a monthly fee
3. Conventional
   • What it is:
     • This is your typical, every day mortgage…hence why it is known as a conventional loan
   • Pros:
     • No VA Funding Fee
     • No Mortgage Insurance Premium (FHA)
     • If you are buying a condo, the condo complex does not have to be VA or FHA approved
   • Cons:
     • You need 20% down
       • You can go as low as 5% down but then you have to pay MIP and the rate is much higher making FHA a better option
     • The qualification requirements are more strict compared to VA and FHA

For more information on all these loan types or to find out which you qualify for, give me a call or shoot me an email.  If you would like to search homes for sale, click the link below:

Search San Diego, CA Homes For Sale

To find out more about these loan types