Buy a home with a VA or FHA loan and clear the underwriting traps

  1. Decide between a VA and an FHA loan
    1 hour

    This step produces a one-line program choice with the numbers behind it. The trap is comparing headline rates instead of lifetime cost: VA charges a one-time funding fee but no monthly mortgage insurance, while FHA charges an upfront premium plus an annual premium that, on most loans, never expires.

    Decide in four actions:

    1. Confirm VA eligibility first. VA is open to veterans, active-duty members, and qualifying surviving spouses. If you qualify, VA is the default choice: 0% down, no monthly mortgage insurance.
    2. Pull both official fee tables. The VA funding fee for a first use with less than 5% down is 2.15% of the loan amount; FHA charges 1.75% upfront plus 0.55% a year for a 30-year loan with less than 5% down.
    3. Run both over the full term. FHA’s annual premium on a $400,000 loan is about $2,200 a year and, with less than 5% down, it runs for all 30 years.
    4. Write the one-line choice with the reason. Example: “VA at 0% down with a one-time 2.15% funding fee, because FHA’s lifetime mortgage insurance costs roughly five times more.”