FHA vs. VA Loan

Difference Between FHA and VA Loan These are both available to home buyers in the United States. They…

Difference Between FHA and VA Loan

These are both available to home buyers in the United States. They form the better way of acquiring loans than the extravagant conventional way of acquiring loans. Currently the lenders’ requirements are rigid due to sky rocketing property rates. FHA and VA loans forms the better ways of obtaining funds to buy a house. Each of the loans has got specific requirements that you need to keep in mind when you want to secure yourself one.

FHA is provided to the people within the class limit for which it is intended for and that the property to be bought is permitted. The class limit of this type of loans is the lower and the middle class earners. VA in the other hand is provided to those who once served in the armed forces or is still serving there and the veterans of war.  VA loans have got no any income criteria at all. Both of these loans are not provided by the government agencies, but are insured by the federal government to increase the security of the loans provided to borrowers that incase of default the government get to compensate the lending institution.

If you intend to acquire yourself a house and you are belonging to the lower or the middle class then your borrowing options are sternly limited by the lending institutions as this is associated to the 10-15% down payment of the value of the property to be acquired. However the function of the two loans is to provide an opportunity to the lower income earners to secure a house. FHA was established in 1934 after the great depression to enable poor people to acquire homes. FHA only insures the money that is given out by the banks to the borrowers, thereby increasing the security in the case of the default by the borrower.

VA loan program was brought about in 1944 to help active duty personnel and war veterans to acquire and retain homes in acknowledgment to their service to the nation. In much consideration both of the two loans are more of the same. VA like FHA only insures the loans that are taken by the veterans to increase security. Both of them have low interest rates to the qualifying candidates.

Variation between FHA and VA loans

In FHA the borrower must meet a 3.5% down payment, while 0% down payment is required for VA loans.

VA loans are relatively low interest rates as compared to FHA loans.

Some amount is catered by the lender for all these loans.

VA loans require no mortgage, FHA loans require a 1.75% upfront MIP.

Seller concessions of 4% maximum are allowed in VA loans, while seller concessions are at 6% is allowed in FHA loans.


  • While FHA is accessible by everyone, VA loans are only applicable to armed forces personnel or war veterans.
  • Both of these loans are government initiatives to help the middle and lower class earners.Both are government initiatives to help those who belong to the low and middle income earners to acquire homes.
  • FHA has a 3.5 down payment while there is a zero % down payment in VA loans.
  • VA loans does not require no mortgage insurance while FHA require a 1.75% upfront MIP.
  • VA loans have relatively lower interest rates as compared to FHA loans and are fixed.


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