VA Home Loan Program Or FHA Home Loan Program – Which is the Best For You?

The United States government provides many benefits to the members that are now serving or have serve in the past in the US military. Active and former members of the United States military can take advantages of benefits ranging from education incentives to compensation for disability occurred while in the military to even life insurance programs. One of the most used and most important is the Veteran Home Loan Program that provides assistance in financing a home loan.

There are currently over 23 millions living veterans and just little less than 10% of these veterans have taking advantage of this great benefit. But there is also another government backed home mortgage loan that veterans may want to consider also. This government backed loan is the FHA Home Loan Program.

So if you are an active member of the military, a veteran, or even a surviving or current spouse of a veteran you may want to compare the advantages and disadvantages of both the VA Home Loan Program and the FHA Home Loan Program.

You need to be fully informed before you buy a home because it is a huge decision and making the wrong decision can cost you thousands of dollars in the future.

VA Home Loan Program VS FHA Home Loan Program

VA home mortgage loans are similar to many conventional home mortgage loans but they do have many great benefits that are not found in conventional loans such as: you do not need a down payment, your credit scores can be lower than what is required for conventional loans, and you can “rolled” the closing and loan fees back into the mortgage thus making it a 100% financing loan.

The FHA Home Mortgage Loan Program is the most popular of mortgage loan programs for non-veterans and is growing in popularity because of the tight mortgage market today.

They have some of the same advantages of the VA home mortgage loans such as: they are easier to refinance, more lenient on the credit scores to qualify, and certainly lower down payment than conventional loans. The FHA home mortgage loan down payment is currently 3.5 of the purchase price of the home.

VA Home Mortgage Loan Eligibility Requirements

A veteran will have to get a Certificate of Eligibility that is issued to by the military to qualified veterans. The Certificate of Eligibility will also include the entitlement amount, which is the portion of the mortgage loan that the VA will guarantee. You can get the Certificate of Eligibility from the VA or you can have your mortgage lender get it for you on the Internet.

One big difference from a VA mortgage loan and a FHA mortgage loan is almost anyone can get a FHA mortgage loan, only people that are or have been in the military can be a VA mortgage loan.

There are no income limits for FHA loans, but there are limits on how much a person can borrow and it varies from each county in the country. You can find out from your mortgage lender what the limit is in your area.

VA home mortgage loans do have limits on how much you can borrow but the limits can currently go up to $729,000 in some parts of the country.

Another difference from FHA loans and VA loans is VA does not require a mortgage insurance premium called a PMI. FHA loans do require mortgage insurance (MIP). By getting a VA home mortgage loan you will save this expense which can be quite costly over the years.

VA home loan makes sense if you are a qualifying member or veteran of the military and they will allow you to take advantage of today’s very low interest rate plus you can buy a home with 100% financing.

If you don’t want to tackle the slight hassle of dealing with the VA or you do not have available VA entitlement then a FHA home loan will make the most sense.

Whether you choose the Veteran Home Loan Program or the FHA Home Loan Program you will need to work with an approved mortgage lender who will help you through the mortgage and closing process.

Owning a home is still the American dream and the government has two great programs to help you to achieve that dream, so get more information on the Veteran Home Loan Program and the FHA Home Loan Program and make that American dream happen for you!

First Home Loan

First home buyers are inundated nowadays with a myriad of information about how to get their first home loan. It is obvious and simple what first home buyers want when looking for a loan. They want information that is clear, they want to be educated about the steps that are involved in getting a loan and, most importantly, they want someone they can trust to organise their finances. First home buyers are often seen as vulnerable because it is the first time they are buying a home so they are especially prone to being ripped off by bad finance sources who are just looking out for their best interests.

If at any stage you come across a housing or finance term that you are not familiar with in this article, please do a quick search on Google or yahoo to find out the meaning, it will help tremendously. Alternately go to the website at the bottom of this article and go to the glossary page.

A few areas that will be covered to help first home buyers with their first home loan will include; the type of borrower you are and the finance sources. There is also a buyer’s checklist able to be downloaded and a home loan calculator link. These topics merely scratch the surface of what is involved. It is recommended that you consult a mortgage broker or another finance source to fully inform you of what is involved when getting your first home loan.

Type of borrower

There are a few different types of home buyers which make up this category. The main three that will be accounted for in this article are; investment buyers, non-conforming buyers and first home buyers.

Investment home buyers

This particular group of buyers already own, or are paying off, some form of property already. They may have been handed down land or property by their parents or relatives or have purchased or used equity in previous properties or land to make further purchases.

Because they have existing property, banks and mortgage brokers are able to source finance a lot quicker and easier, because they have collateral behind them (which is like a security back up in case their finances go bad for the second or third property purchase).

Non conforming home buyers

Non conforming home loans are basically designed for finance for those people who may be in unusual situations with how their income is paid or how they wish to finance their home loan or mortgage. Non conforming borrowers are also people who may have been previously rejected for a home loan for a number of reasons such as bad credit history, bankruptcy or unusual incomes (more information on non conforming areas below).

Banks are normally quite reluctant to approve mortgages for those that fit into the non conforming loan borrower and people often find that their first ‘standard’ loan application is rejected by the banks.

First home buyers

Buying your first home is without doubt one of the biggest and most exciting purchases you will ever make.

What you ideally need is a mortgage broker or other finance source that will assist you in the process of weighing up your options so you have an objective assessment of what is the best loan for your situation. Mortgage brokers tend to be more objective than banks because mortgage brokers can have a look at a multitude of different finance options from different financial institutions to find the best loan for your situation. Even better, if you can find a mortgage broker than specialises in first home buyers then they will have even better information and help available because they help first home buyers all of the time.

Do you need help getting your first home loan or assistance with the First Home Buyers Grant? Don’t worry you’re not alone. It’s often hard to figure out where to start when looking for your home loan. There are so many options and so many mortgage providers to choose from. First West Home Loans specialise in helping first home buyers with the process of getting their first home. We guide you through the steps needed to successfully secure finance.

There are many incentives available to first home buyers in Australia, including the first home buyer’s grant, which is $7,000. In addition there is also the option of having no stamp duty on your purchase.

As with all things there are conditions attached.

How much can you borrow?

Using a home loan calculator can help give you a rough idea about how much you can borrow. Don’t be disheartened if it is not as much as you initially hoped for, it is a rough calculation. For an accurate assessment contact a mortgage broker or other financial source to get further information.

Home Loan Eligibility Criteria in India

Owning your dream place in this modern era seems quite tough. The rapidly rising price of real estate has caused a lot of worry to all those people who were longing to buy their dream home. If high rates are bothering you, then you need not worry. You can always get a home loan to purchase your dream home. However, you need to be eligible for the home loan. Here we explain the home loan eligibility criteria in India, which is quite similar for all reputed Indian banks.

First and foremost, to be eligible for the home loan, you will have to be either of the following:

  • Salaried Individual
  • Professional
  • Self Employed

This clears one thing that you will have to have a regular income source in order to meet the eligibility criteria. This is important because the bank expects the loan to be repaid and if the borrower is an earning person, he or she will somehow manage to repay the loan. In other words, the risk involved in lending money to an earning person is less, and that is why most banks offer loans to people with a steady income.

Now let us discuss the above listed categories in detail.

1. Salaried Individual: Under this category, you should be a permanent employee of a private or government based company. If it is a private company, the company must be a reputed one. Bank account details and salary slips can be produced in the form of documents. If you fall under this category, you can apply for the home loan. If your spouse falls under this category, the loan can be applied in his/her name.

2. Professional: Professionals; that is, doctors, engineers, dentists, architects, charted accountants, management consultants, company secretary, cost accountants only are eligible to apply for a home loan.

3. Self Employed: If you are running a business or if you have a different source of income, and if you have been regular in filling your income tax, you can apply.

Now that you are aware of the qualifying categories, let us discuss some other factors that determine your home loan eligibility.

  1. Income – How much you rake in each month determines the amount of loan you are eligible for. Indian banks usually keep the EMI to income ratio between 50 and 60 percent.
  2. Age – The applicant should be at least 24 years of age at the time of loan commencement and up to the age of 60 years or superannuation (up to 65 years or less in case of professionals and self-employed individuals) at the time of loan maturity.
  3. Interest Rates – Loan eligibility is inversely proportional to the interest rate. If your applicable interest rate is low, your loan eligibility will be high and vice-versa.
  4. Loan Tenure – The longer your loan tenure, greater the loan amount you would be eligible for.
  5. Existing Loans - As a standard, Indian banks try to keep the EMI to income ratio between 50 and 60 percent. In case you have any existing loans, the eligibility amount for the new loan will be reduced to maintain that EMI to income ratio.
  6. Credit History - Banks also check your credit history from CIBIL (Credit Information Bureau India Ltd.), which is India’s first credit information bureau. They have a repository of information containing the credit history of consumer and commercial borrowers. This information is available in the form of credit information reports. To ensure that you meet the home loan eligibility criteria, you can access your own credit report by visiting the CIBIL website.