The FOCUS on NoVA Real Estate® Team explores the three categories of loans and the pros and cons to each.

Today we are talking about Loans 101. There are three different categories of loans: Veterans Administration (VA) loans, FHA loans and conventional loans. Both FHA and VA loan programs are federal government backed loans which tend to have slightly less strict guidelines than that of the conventional loans which are not backed by the federal government.

To qualify for a VA loan you must 1) be a veteran with eligibility; 2) can receive up to 100% financing with full entitlement along with no mortgage insurance; and 3) expect a large funding fee for the loan, unless you are disabled, at which point you do not have a funding fee. The funding fee can be rolled into your overall mortgage reducing your overall cash required to closing to almost nothing.

In most cases the FHA loan is designed to put first-time homebuyers into their properties with low down payments. It features a 3.5% of the total sales price down payment. It has the absolute most relaxed qualification guidelines of the three loan programs, including accepting lower credit scores.

Conventional financing is a very broad private-funded loan products which have the most strict qualifying guidelines to include credit scores which must be a little bit higher than those of the other two programs. It has the absolute most variety of the products designed to meet the needs of the individual clients. Lastly, there are flexible down payment options anywhere from 0% down for first-time homebuyers. You can be very creative within these packages.

For more information about these loan programs, contact us today and we will be happy to discuss them with you or put you in touch with one of our lenders of choice.