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in Susanville, CA
Both FHA and VA loans offer low-barrier entry into homeownership in Susanville, but they serve different borrowers. FHA loans work for anyone who qualifies, while VA loans require military service but deliver unmatched benefits.
These government-backed programs dominate financing in smaller California markets like Lassen County. Understanding which one fits your profile determines how much you'll pay upfront and monthly.
FHA loans require just 3.5% down with credit scores as low as 580. You'll pay an upfront mortgage insurance premium of 1.75% plus annual premiums of 0.55-0.80%, which stay for the loan's life on most purchases.
Debt-to-income ratios can stretch to 50% with compensating factors, making FHA work for borrowers conventional lenders reject. Sellers can contribute up to 6% toward closing costs, which helps in Susanville's rural market where cash reserves run thin.
VA loans require zero down payment and charge no monthly mortgage insurance. You'll pay a one-time funding fee of 2.3% for first-time use (1.25% if you put 5%+ down), which you can roll into the loan amount.
VA allows debt-to-income ratios above 50% with residual income analysis, and appraisers enforce stricter property standards than FHA. Sellers can pay all your closing costs, and you can reuse the benefit multiple times if you pay off or sell.
The down payment gap matters most: VA requires nothing while FHA needs 3.5%. On a $300,000 Susanville home, that's $10,500 you either need or don't.
Monthly costs diverge sharply after closing. FHA charges mortgage insurance forever on 3.5% down deals—around $200/month on that same loan. VA has no monthly insurance, saving $2,400 annually.
Eligibility rules create the clearest divide. FHA accepts any qualified borrower regardless of service history. VA demands military connection through active duty, veteran status, National Guard service, or surviving spouse designation.
If you're eligible for VA, use it. The math overwhelmingly favors zero down and no monthly insurance, even with the funding fee. You'll close with less cash and pay less monthly than any FHA scenario.
Choose FHA if you lack military eligibility or the property fails VA's stricter standards. Some Susanville homes with well or septic issues pass FHA but get flagged by VA appraisers, forcing you to conventional or FHA financing.
Credit matters less than you'd think—both programs accept 580 scores and approve borrowers conventional lenders decline. The real decision point is whether you have the military connection to unlock VA benefits.
No, these are mutually exclusive for each purchase. You choose one loan type per transaction, though you could have VA on one home and later use FHA on another purchase.
Rates run nearly identical between the two programs. VA occasionally edges lower by 0.125%, but monthly insurance makes FHA significantly more expensive overall.
FHA typically closes 2-3 days faster because VA appraisals include stricter property inspections. Both usually settle within 30 days with experienced lenders.
Yes, through VA refinancing once you've established payment history. Many borrowers start with FHA then refinance to VA after confirming eligibility or property improvements.
Sellers prefer VA when properties meet standards because VA buyers close with more certainty. FHA faces less scrutiny but requires buyer funds that some lack.