May 12, 2011
The Department of Veterans Affairs offers VA home loans to qualified service members as part of their VA benefits package. Why would a veteran want to explore options for an FHA home loan? It’s a very good question, and depending on the status of a military veteran, he or she may find an FHA mortgage to be a good alternative when the full benefits of a VA loan are unavailable.
VA loan applicants must first apply for eligibility through the VA–the VA loan benefit is not automatic. In some cases the borrower may not have served long enough to qualify for benefits. This is true in the case of Guard and Reserve members who haven’t served for six years (unless “otherwise eligible” according to the VA). That’s just one example, but the guard or reserve member who hasn’t met eligibility requirements yet may wish to explore FHA loan options.
Veterans who do technically qualify for VA benefits may not be eligible for a full VA home loan. For example, a borrower who has already used VA eligibility but has not paid off the loan yet or otherwise made themselves eligible for full restoration of their VA loan benefits. One example of such a situation would be, according to the FHA official site, “…veterans whose eligibility is tied up until a loan that was assumed is paid off or the veteran is released from all liability…”
These and other circumstances can make an FHA mortgage a tempting alternative. While VA home loans offer a no-money-down option, the FHA down payment requirement is low compared to many conventional mortgages–3.5% down, plus the down payment can come from a family member, employer or charitable organization (as a gift).
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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