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in Santa Monica, CA
Santa Monica's median home prices make low-down-payment options critical for most buyers. Both FHA and VA loans offer government backing, but they serve different borrower types with distinct advantages.
FHA loans work for anyone who qualifies, requiring just 3.5% down. VA loans are exclusive to military members and veterans but eliminate the down payment entirely.
FHA loans require 3.5% down with credit scores as low as 580. You'll pay mortgage insurance premiums—both upfront (1.75%) and monthly—for the life of the loan on most purchases.
These loans cap at conforming limits but work well for first-time buyers or anyone rebuilding credit. Debt-to-income ratios can stretch to 50% with compensating factors.
VA loans require zero down payment and no monthly mortgage insurance. You'll pay a one-time funding fee (2.3% for first use, waived for disabled veterans) that can be rolled into the loan.
Credit requirements are flexible—most lenders want 620+ but the VA sets no official minimum. Loan limits don't apply in Santa Monica, which is a high-cost area.
The biggest split is eligibility: VA loans are restricted to veterans and active military, while FHA is open to everyone. VA loans eliminate both the down payment and monthly mortgage insurance, making them significantly cheaper over time.
FHA's mortgage insurance never drops off on purchases with less than 10% down. VA's funding fee is one-time only. For a $1.2M Santa Monica condo, that difference saves roughly $600/month.
If you qualify for a VA loan, use it. The no-down-payment and no-PMI structure beats FHA on virtually every deal. The only exception: disabled veterans with funding fee exemptions might comparison-shop non-VA options if they have cash to put down.
FHA makes sense when VA eligibility doesn't exist. It's still one of the most accessible loans for lower credit scores or limited savings, just expect to carry that mortgage insurance permanently unless you refinance later.
Yes, if the building is VA-approved. Most larger complexes qualify, but the HOA must meet VA standards for reserves and owner-occupancy ratios.
VA loans typically price 0.125% to 0.25% lower than FHA. Rates vary by borrower profile and market conditions, but VA's government guarantee reduces lender risk.
Yes. FHA requires 3.5% down which can be fully gifted. VA requires no down payment, but gift funds can cover closing costs and the funding fee.
VA loans often approve scores FHA would decline. Most VA lenders accept 580-600 scores where FHA gets difficult below 620 despite official minimums.
Only by putting 10%+ down, which drops the insurance after 11 years. With 3.5% down, you pay it for the loan's entire term.