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in Lancaster, CA
Lancaster buyers often choose between FHA and VA loans for their low down payment options. Both are government-backed, but they serve different borrowers with different requirements.
FHA loans work for anyone who qualifies. VA loans require military service but offer better terms. Your eligibility determines which path makes sense.
FHA loans let you buy with 3.5% down if your credit score hits 580. You can go as low as 500 with 10% down. Most Lancaster first-time buyers use FHA when they lack VA eligibility.
You'll pay mortgage insurance for the loan's life on most FHA loans. Upfront MI costs 1.75% of the loan amount. Monthly MI runs 0.55-0.85% annually depending on your down payment and loan term.
FHA accepts debt ratios up to 50% with strong compensating factors. Sellers can contribute up to 6% toward closing costs. Gift funds can cover your entire down payment.
VA loans require zero down payment for eligible veterans and active-duty service members. No monthly mortgage insurance ever. This saves $200-400 monthly compared to FHA on a typical Lancaster home.
You pay a one-time funding fee instead of ongoing MI. First-time users pay 2.15% with zero down. Veterans with disabilities get the fee waived completely.
VA allows debt ratios over 50% with residual income guidelines. Sellers can pay up to 4% toward costs. The VA appraisal protects you with stricter property standards than FHA.
The biggest gap is monthly cost. A $450,000 Lancaster home with FHA costs about $250/month in MI. The same home with VA has no MI but a higher funding fee upfront.
VA wins on long-term cost for most buyers. FHA wins if you have low credit or plan to sell within 3-4 years. VA property standards are tougher—some fixer-uppers won't qualify.
FHA works for anyone. VA requires a Certificate of Eligibility proving military service. Active duty, veterans with honorable discharge, and some surviving spouses qualify.
Use VA if you qualify—it beats FHA on monthly cost and total interest paid. The only exceptions: your credit is below 580, or the property won't pass VA appraisal standards.
Choose FHA if you're not military-connected or buying a property that needs work. It's the best low-down-payment option for civilians. FHA also works better for quick sales since you recover MI premiums faster than VA funding fees.
In Lancaster's market, we see veterans use VA for turnkey homes and FHA for properties needing cosmetic updates. Check your eligibility first—don't assume you can't use VA.
No, you pick one loan per property. If you qualify for VA, use it—the savings over FHA are substantial on monthly payments and long-term interest.
Most VA lenders want 620 minimum. FHA goes down to 580 or even 500 with larger down payments. FHA wins for buyers rebuilding credit.
FHA typically closes 2-3 days faster. VA appraisals take longer due to stricter property inspections. Budget 30-35 days for VA versus 25-30 for FHA.
Only if you put down 10% or more—then MI drops after 11 years. Most FHA buyers pay 3.5% down and carry MI for the loan's life.
Sellers worry VA appraisals kill deals over repairs. In practice, both loans close reliably. Strong offers overcome seller bias regardless of loan type.
Try VA first—some lenders go below 620 for veterans. If denied, use FHA. You keep your VA eligibility for future purchases when credit improves.