Appraisals – Similar
The appraisal requirement for FHA and VA are largely the same. Our Appraisal Manager recently wrote an excellent blog about appraisal differences, and it can be found here.
Appraisers – Different
FHA allows us to pick appraisers from our own hand-picked pool.
VA forces us to use “VA approved appraisers” assigned by the VA.
B/c we don’t have the ability to choose VA appraisers or hold them accountable, the quality of VA appraisals is often inferior.
Property Condition – Different
FHA allows for “As Is” transactions. FHA does NOT require a clear Section I.
VA requires clear Section I termite reports, and clear section II if the items are health and safety risks.
Closing Periods – Different
FHA – we can close FHA loans in 14 days.
VA – we need 21 days to close VA loans b/c appraisal turn times are slower, and b/c dealing with the VA is cumbersome in general.
Rates – Similar
Both VA and FHA have lower rates than typical conventional loans. Lower rates are in fact a major advantage of both loan types.
Mortgage Insurance – Different
FHA has mortgage insurance of 0.85% for most loans (with less than 5% down).
VA has no mortgage insurance – one of the reasons VA financing is a fantastic opportunity for veterans.
Up Front Fees – Similar
FHA has an “Up Front Mortgage Insurance Premium” of 1.75%.
VA has a “Funding Fee” of 2.15% with zero percent down. This fee decreases with larger down payments.
Down Payment – Different
FHA requires a minimum of 3.5% down.
VA allows for 100% financing (0% down).
Jay Voorhees at (925) 855-4491
Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646
