VA Loan Vs FHA Loan
Both are backed by the federal government and both are built for buyers who do not fit a conventional box. They differ most on who qualifies, what you pay for mortgage insurance, and how long that cost stays with you.
Two federal programs, two different front doors
What each one asks of you before anything else.
- A VA loan requires a Certificate of Eligibility tied to qualifying service
- An FHA loan has no service requirement and is open to any qualified buyer
- Both ask you to live in the home as your primary residence
- Both can be used to purchase or to refinance
- Both allow one-to-four unit properties when you occupy one of the units
- Credit, income, and lender standards apply to both
No monthly mortgage insurance on a VA loan
No down payment required on a VA purchase
FHA is open without military service
The VA funding fee can be waived
Either program can be refinanced later
Occupancy rules are similar on both
What Actually Separates Them
Three differences decide this for most borrowers.
The first is eligibility. A VA loan is a benefit tied to service. The Department of Veterans Affairs requires a Certificate of Eligibility, and states you must also meet VA and lender standards for credit and income and intend to live in the home you are buying. An FHA loan asks none of that. It is open to any qualified buyer.
The second is mortgage insurance. VA states that a VA-backed loan means no need for private mortgage insurance or a mortgage insurance premium. An FHA loan carries both an upfront premium and a periodic premium collected along with the regular payment.
The third is how long that cost lasts. VA describes its funding fee as a one-time payment, and it is waived entirely for several groups. HUD ties the end of the FHA periodic premium to when the case number was assigned, and for most newer loans it ends only when the mortgage is paid in full.
How to choose between them
Most people are not choosing between two open doors. They qualify for one, or one is simply the better fit for their file. Here is how it usually breaks down.
Eligibility Is The First Test
If you can get a Certificate of Eligibility, a VA loan is usually worth pricing first. VA lists three conditions: you qualify for a COE, you meet VA and lender standards for credit and income, and you will live in the home you are buying.
Mortgage Insurance Is The Split
This is the clearest difference between the two. VA states that a VA-backed loan needs no private mortgage insurance and no mortgage insurance premium. An FHA loan includes both an upfront premium and a periodic one.
The Funding Fee Can Disappear
VA describes the funding fee as a one-time payment, and several groups pay nothing at all. That includes anyone receiving VA compensation for a service-connected disability, and surviving spouses receiving Dependency and Indemnity Compensation.
FHA Insurance Tends To Stay
HUD ties termination of the periodic premium to when the case number was assigned. For loans with case numbers assigned on or after June 3, 2013, HUD states the insurance can be terminated if the mortgage is paid in full before the maturity date.
Both Ask You To Live There
Neither program is for a rental you will not occupy. VA requires that you live in the home you are buying, and FHA is likewise limited to a primary residence. Both still allow a one-to-four unit property when you occupy one of the units.
Your File Decides The Rest
Credit history, income documentation, the property itself, and your entitlement position all move the answer. Two veterans with identical service can land in different places, which is why we price both before recommending either.
Hear From Homeowners Like You
Frequently Asked Questions
The questions we get asked most when someone is weighing these two.
Often yes. Entitlement can be restored or partially reused depending on whether the earlier loan was paid off and whether the property was sold. It comes down to your entitlement position, which we check against your Certificate of Eligibility.
No. The COE is a VA document. FHA has no service requirement and no Certificate of Eligibility.
No. VA states that a VA-backed loan means no need for private mortgage insurance or a mortgage insurance premium. There is a separate one-time funding fee, and some borrowers do not pay it at all.
VA lists several groups. They include anyone receiving VA compensation for a service-connected disability, those eligible for compensation but receiving retirement or active-duty pay instead, and surviving spouses receiving Dependency and Indemnity Compensation.
Both programs allow one-to-four unit properties, as long as you occupy one of the units as your primary residence.
It depends on when the case number was assigned. HUD ties termination to that date, and for loans with case numbers assigned on or after June 3, 2013, HUD states the insurance can be terminated if the mortgage is paid in full before the maturity date.
If you are eligible for a VA loan it is usually worth pricing first, largely because of the mortgage insurance difference. But eligibility, credit, the property, and your entitlement all matter. We will price both and show you the two side by side.
Find out what you qualify for
Tell us about your service and the home you have in mind, and we will price a VA loan and an FHA loan side by side so you can see what the difference actually is for your situation.
Get Pre-Qualified- Department of Veterans Affairs, VA-backed home loans
- Department of Veterans Affairs, VA funding fee and closing costs
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Saxton Mortgage, LLC. NMLS #1717191. Equal Housing Lender. Licensed in 41 states. This is not a commitment to lend. All loans are subject to credit approval and underwriting. Program terms and eligibility are set by the Department of Veterans Affairs and the U.S. Department of Housing and Urban Development and are subject to change.