VA vs USDA vs FHA. Which one is best?

5 Replies

My relator recently told me that if I used my VA loan, it would cost more the next time I use it. I don't really understand what that meant. Can anyone explain that?? She suggested I use the USDA loan instead. What are the pros and cons of a VA or USDA or even an FHA home loan?

Hi: I'm Connie New son Pro Real Estate Agent in Memphis, Tennessee and Surrounding area. Its best you ask you agent to explain things to you that you don't understand. I'm a Real Estate Agent since 1999.  Its my goal to get my clients the best service . Trying calling the Loan office . I'm a Agent not a loan officer. 

Its best you contact your agent and loan officer 

Not familiar with all of them cuz I didn't use them but from what I know they are all owner occupant loans 

VA- veterans only loan usually no money down loan that are just for if you been or active in the service

USDA- another no money down loan which is only for rural areas I believe

FHA- 3.5% down loan

@Zachary Caudill there is a funding fee cost for the VA loan. The cost of the funding fee varies depending on if you got your benefits from the Reserves or Active Duty and if you have used the benefits before. The difference between the first time use and second time use is 1.15%. Most lenders will roll the funding fee into the loan. Considering the VA loan has no PMI its still by far the best deal normally. Additionally, if you have a 10% disability or higher through the VA; the funding fee is waived.

The only problem with the VA loan if you intend to "house hack" they will not put any of the expected rent towards your income unless you have Property Management experience.

https://www.benefits.va.gov/homeloans/documents/docs/funding_fee_table.pdf

Go here for more on the funding fee. You may also be expected to pay for inspections (except termite). You cannot be expect to pay anything to your real estate agent. The lender can charge up to a 1% origination fee.

If you want to know more go to the VA Lenders handbook that is mentioned in the link above. Most real estate agents don't understand the VA loan benefits; most lenders actually don't understand the benefits either. If you find a real estate agent that is a Military Relocation Professional (MRP) they should be able to get you in touch with local lenders to get your loan pushed through.

The major national lenders that give out VA loans most often have often have crappy loan officers that are way out of the loop. Getting a local lender gives you a stronger offer when using a VA Loan for two reasons.

1) they can close faster (in as little as 30 days in some instances - vs 60 for national lenders)

2) their pre-qualification is more rigorous so their financing will not fall through as often. (Unlike other loans the VA loan is never pre-approved; so only those who care to save their time will actually qualify you well during pre-qualification)

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