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in Norwalk, CA
Both FHA and VA loans help Norwalk buyers overcome the biggest barrier to homeownership: the down payment. FHA requires just 3.5% down, while VA requires nothing at all.
The catch is eligibility. FHA works for nearly anyone with decent credit. VA requires military service but offers better terms in every measurable way.
FHA loans accept credit scores as low as 580 for 3.5% down, or 500 with 10% down. You'll pay mortgage insurance premium (MIP) for the life of the loan unless you put down 10% or more.
The upfront MIP is 1.75% of the loan amount, plus annual premiums between 0.45% and 1.05% depending on your down payment and loan term. This adds $200-$400 monthly on a typical Norwalk home.
FHA caps your debt-to-income ratio at 43% in most cases, though compensating factors can push this to 50%. Gift funds cover your entire down payment if needed.
VA loans require zero down payment and charge no monthly mortgage insurance. You pay a one-time funding fee instead: 2.15% for first-time use, 3.3% for subsequent use.
Disabled veterans and surviving spouses often get the funding fee waived completely. Credit score minimums vary by lender, but most approve at 580-620.
VA allows debt ratios above 50% with strong residual income. The program caps what you pay in closing costs and prohibits prepayment penalties entirely.
The monthly payment difference is substantial. On a $600,000 Norwalk home, FHA requires $21,000 down plus $350 monthly MIP. VA requires no down payment and no monthly insurance.
FHA rates run 0.25-0.5% higher than VA rates because lenders price in the added risk. A VA borrower typically saves $150-250 monthly compared to FHA on the same loan amount.
Property requirements differ too. VA appraisers flag issues FHA might overlook, particularly around safety and habitability. Expect more inspection items with VA financing.
If you qualify for VA, use it. The zero down payment and no mortgage insurance beat FHA in every scenario unless you need to close in under 20 days and can't meet VA appraisal requirements.
FHA makes sense for non-military buyers who can't hit conventional 620 credit minimums or lack the 5-20% down payment conventional loans require. It's the bridge between bad credit and homeownership.
One exception: if you've used VA benefits before and would pay the 3.3% subsequent-use funding fee, compare that cost to FHA over your expected holding period. Run the numbers both ways.
No. You can only have one government-backed loan at a time unless you're relocating for military orders and keeping your first home as a rental.
FHA typically closes 2-3 days faster because VA appraisals require additional property inspections. Budget 30-35 days for either loan type.
Sellers often worry both loan types will require repairs. A strong pre-approval and quick close timeline matter more than the loan type itself.
Yes. Many buyers start with FHA and refinance to VA once eligible, eliminating mortgage insurance. You'll pay VA funding fee but save long-term.
FHA approves at 580, VA at 580-620 depending on lender. We find loans for both programs down to these minimums regularly in Norwalk.