VA vs FHA

19 Replies

Good evening BP! I was wondering if any of you guys could weigh in on which would be the better loan to start off with. I'm wanting to do a residential multi fam, house hack for the one year owner occupy then move on to the next one. It'll be my first so i'm just for any adive you might have. Thanks in advance for your help!!

Not sure, but is VA a one-time shot? If so, I might start there.

My only knowledge of FHA is my daugher's experience. She bought her first home with FHA and lived there about 3 years. FHA allowed her to then rent that one out, and buy another one with FHA financing, because her new job was far enough away that commuting was not feasible.

So, it's possible to have more than one FHA loan, and have at least one be a rental, if you lived in it, and had to move a certain distance away.

I don't know if that's an option with VA.

Just more info that might be helpful.  Otherwise, just look at which offers the best rates.

Good luck to you!

@Sue K.

Thanks very much for you feedback. I do know you can use the VA twice, the second being up to 144,000 I believe. You also don't need PMI which is good too. But I'm new so I gotta ask questions lol. I'm still leaning towards the VA, if you ever hear something more feel free to share. Thanks again for your time :)

VA is 0 down, never done an FHA but requires something like 3.5 or 10% down. VA doesn't require PMI, however, there is a fat "VA funding fee" of like 2%. So when you look at it, it almost evens out with PMI by the time you pay enough down to get out of PMI. You can roll the funding fee into loan though.

You can use the VA loan multiple times, it's a lifetime benefit, it's just that you can only have one at a time.

@Ross Ellington  

@George Nikolakakos

My daughter's loans have been 3.5% down, and she got both before they required PMI long-term. As I understand it now, FHA requires PMI longer term than they used to - but double check that.

If VA only allows one loan at a time, that's handy info. FHA will allow more than one at a time - if you have to move far enough away that commuting isn't feasible.

If I remember correctly, there's no penalty if you move back to where the original rental was/is, and buy even another one there and keep the original one as a rental.  Double check, though.

Originally posted by @Ross Ellington :

Hey @Sue Kelly I believe they extended PMI for the life of the loan.

@George Nikolakakos Is that funding fee due at closing?

Yeah, that's what I thought. That's definitely something to think about. Having to pay for PMI for the life of the loan is absurd. Normally, I think you're out of PMI on a traditional loan once you have 20% equity, if I remember correctly. I guess they want people to refinance. Too bad.

Wow, I didn't realize it was for life of the loan. In that case the funding fee sizes up better. Yes, due at closing but like I mentioned you can simply roll the fee into the mortgage so you're out of pocket nothing at the closing table. Bought my primary residence on a VA loan and we left the closing table without spending a dime.

it comes down to a couple of different things! 

I will start off that we have used our ca to the fullest on two seperate houses (you can split a va loan). We have not done a FHA house.

I don't like FHA because it has a funding fee AND Pmi doesn't fall off! Especially since conventional is only 5% and no fundifng fee and Pmi does fall of :)

I personally would do va over FHA! Now of you were able to do usda I would say to do that one because that is only as a first time home buyer!

Feel free to pm me if you have any va questions! Love them!

Is it possible to use a VA loan to purchase a duplex?

@Dustin Little You can a residential multi family but you must owner occupy for a year. There is a waiver you can get to bypass the normal 60 days move in period, in the event that all units are under lease longer than those 60 days. But it must be your intent to owner occupy for a year. The waiver is good for 12 months. 

@Jerry Padilla Always good to hear from you my friend. Yep you can't be 0 down :)

@Elizabeth Colegrove Hope you're doing well. Is a conventional loan really only 5% down payment??? I thought it was 20? Maybe I'm off. 

@George Nikolakakos Awesome stuff George. I'll def be rolling it into the loan. That's a great strategy. 

@Sue K. Yeah, I don't know Sue. I need to learn more about that stuff for future loans. Have a great night.

They now allow conventional 5%. It is for personal properties, i.e. home you will live in only. But it is a great loan. We are closing one next month if all goes well.

@Elizabeth Colegrove you're killing it girl, great job! No owner occupy for a year stuff? Just straight personal property only?

@Ross Ellington

ITjust mean that you have to buy the house as a personal property with the intention of living it for at least a year. The houses we buy for rentals charge 25% because ewe have more than 4 houses :(  

Ah, so you can use conventional with 1 year owner occupy then rent it out? haha forgive me if I'm misreading your posts :(

The VA funding fee is waived is you have a service related disability of 10% or more. Depending on the your type of service and the number of times you use your VA loan the funding fee can be up to 3.3%.

Type of service as in active duty vs. a national guard/reserve status. We are actually refinancing our personal residence right now and the funding fee waiver has saved us over 5k. Although I'd pay that every damn day if it meant my husband weren't so broken! ;-)

@Samantha Hiscock Thanks for the info, sorry for your husband :) That's good about the savings, it can go somewhere else :)

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