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Question by KNight31: What is the difference between VA, approved FHA, remedy Conventional?
I’m thinking of refinancing my home, I would like to know which insurance is better VA, FHA, Conventional? what’s the difference between each one. Which one should I go with ?
Best answer:
Answer by Emmers
First of all, those are not insurance, they are loan programs. VA stands for Veteran’s Administration and that program can only be used if you are a veteran, so if you are not, you cannot use that loan program.
FHA stands for Federal Housing Administration and that is backed by the federal government and administered by Fannie Mae, Freddie Mac, and Ginnie Mae. It requires a private mortgage insurance with the monthly payment. Credit score requirement for this loan program is 620 or higher.
Conventional requires a 680 credit score or higher and carries mortgage insurance until you have 20% equity in your home or more. So, if you think you have more than 20% equity, I would go with conventional if you meet the credit score limit. Otherwise, you may want to go with FHA.
Give your answer to this question below!
What type of loan are you in now?
Conventional loans require that you be at a max of 95% loan to value.
FHA loans require that you be at a max of 97.75% LTV.
VA Loans go up to 106% LTV
In order to be eligible for a VA Refi, you must be in the Military or a Veteran. For VA and FHA loans, your middle credit score must be at or above 620 (680 to 700 for conventional depending on the lender), and you must have a good history with making payments on time for the last 12 months.
Conventional loans have premium mortgage insurance until you are about 78 to 80% LTV.
FHA loans have an up front premium of 1.75% (gets financed into the loan amount) and .55% monthly (which is generally cheaper than PMI for conventional loans). Mortgage insurance is required for the first 60 months on all FHA Loans.
VA Loans have no mortgage insurance, but they do have the VA Funding Fee which is 2.15% for 1st time VA Loan users, 3.3% for previous users, and .5% if you are currently in a VA Loan. If you have a Service Connected Disability, there is no funding fee or mortgage insurance.
FHA & VA rates are identical (government loans), and conventional rates are about 1/8% higher the majority of the time (this varies depending on market conditions, as I’ve seen conventional rates lower and higher at varying times than VA / FHA rates).
If you are 80% LTV or lower, go conventional. If not, go VA if you are a Veteran or active Service member. If neither or the above, go FHA all the way.
I hope this helps!