VA Loan or FHA Loan: Which is the Best Loan for Veterans

VA Loan or FHA Loan: Which is the Best Loan for Veterans

As a veteran in the military, you can acquire significant benefits from the government. When it comes to applying for a mortgage loan, you can choose from various options to help you purchase the house of your dreams. 

Some of the most recognized loans are from the Department of Veterans Affairs (VA) and The Federal Housing Administration (FHA). Both programs are funded by the government and have their own advantages and disadvantages.

If you’re wondering which loan is the best one for you, it will depend on your circumstances. Keep reading below to find out the factors that can help you decide on the best loan.

Down Payment Terms

When it comes to down payment agreements, VA loan policies seem to beat FHA loans. If you’re worried about the money you’ll be shelling out as advanced payment, applying for a VA loan won’t require you to provide any down payment at all.

Meanwhile, when you apply for an FHA loan, you’ll need to provide at least a 3.5 percent down payment. As much of a bummer as that might sound, the reality is that 3.5% isn’t much, as most regular home buyers usually pay 20 percent in advance to ensure the reservation of an estate.

Insurance Policies

If you’re leaning towards getting a VA loan, you won’t be needing any kind of insurance to back you up, no matter how much money you intend to pay upfront. As part of a VA loan, veterans’ loans are guaranteed to be covered. But it will only work as long as the insurance is taken from you as a homebuyer.

With an FHA loan, on the other hand, if you offer a down payment that’s lower than 20 percent, you will need to answer to a mortgage insurance premium (MIP). You can choose to pay the MIP either when it’s time to settle the FHA loan or every month, including an annual fee that’s appropriately distributed.

Mortgage Rates 

Home mortgage rates aren’t constant, and only the lender can decide on the changes. However, FHA loans do have higher interest rates than VA loans, on average. That’s because VA loans cater to veterans with higher debt-to-income ratios and lower credit ratings.

In addition, VA loans won’t oblige you to get your own mortgage insurance. The only downside to VA loans is that it will take some time to be processed as compared to FHA loans.

Credit Rating

While VA loans don’t have a minimum credit rating, some lenders still expect to see numbers. It means that your credit score must be at least 620 to really secure your lender’s trust. With FHA loans, you can get approved if you have a credit rating ranging from at least 520-620. However, the consensus, as with all loans, is that higher credit scores make for better approval rates.

Debt-to-Income Ratio 

Despite being a veteran, your DTI will still be considered. In the case of VA and FHA loans, both loans will require you as a homebuyer to maintain your total debt-to-income ratio below 45 percent. 

It means that the total amount you spend on debt monthly, including the best mortgage rates you’re vying for, should be lower than 45 percent of your monthly income to be approved with either loan. 


In conclusion, VA loans appear to have more advantages than FHA loans, but it will always depend on your situation and personal preference. But if you think you’re qualified for a VA loan, you should take the opportunity to check mortgage rates today and start applying now.

Are you looking for a mortgage broker in the US to assist you with your veteran loan? Frontline Financial is run by mortgage experts who specialize in guiding veterans looking to buy new homes. Get in touch with us today so we can process your application right away!