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in Walnut, CA
Both FHA and VA loans offer government backing with easier approval than conventional mortgages. The main split: FHA requires just 3.5% down but charges mortgage insurance for life on most loans, while VA offers zero down but only works for military borrowers.
Walnut's family-oriented neighborhoods attract both first-time buyers using FHA and veterans using their VA benefits. Your military status usually decides this choice, but overlap exists for eligible veterans weighing both options.
FHA loans accept credit scores as low as 580 for 3.5% down, or 500 with 10% down. You'll pay an upfront mortgage insurance premium of 1.75% plus annual premiums between 0.55% and 0.85% based on loan size and down payment.
These loans work well for Walnut buyers stretching to afford the area's single-family homes. Maximum loan limits in Los Angeles County allow borrowing up to conforming limits, covering most properties here.
The mortgage insurance never drops off unless you put down 10% or more at purchase. Many borrowers refinance to conventional once they hit 20% equity to eliminate this cost.
VA loans require zero down payment and charge no monthly mortgage insurance. You pay a one-time funding fee ranging from 1.4% to 3.6% of the loan amount, though disabled veterans get this waived completely.
Credit requirements flex lower than conventional loans, often approving scores in the high 500s with strong compensating factors. Lenders focus heavily on residual income calculations to ensure you can handle the payment comfortably.
The program caps how much sellers can charge in fees and limits what lenders can collect. This protection saves veterans thousands compared to other loan types, though it sometimes makes offers less attractive to Walnut sellers.
The clearest split is upfront cash. FHA needs 3.5% down plus closing costs, while VA needs only closing costs and the funding fee. On a $800,000 Walnut home, that's $28,000 minimum for FHA versus potentially zero with seller concessions on VA.
Monthly costs flip the script. FHA charges permanent mortgage insurance adding $400-600 monthly on typical loans here. VA has no monthly insurance, meaning lower payments despite borrowing more.
Eligibility creates the hard line. Any buyer with decent credit can use FHA. VA requires military service, National Guard duty, or status as a surviving spouse with a valid Certificate of Eligibility.
If you're an eligible veteran or active-duty service member, VA wins on almost every financial metric. Zero down and no mortgage insurance create massive savings over the loan life, even accounting for the funding fee.
FHA makes sense when you're not eligible for VA benefits but need lower credit requirements or minimal down payment. It's also the move when buying a fixer in Walnut, since VA appraisals flag repair issues that kill deals.
Some veterans still choose FHA when buying multi-family properties beyond VA's occupancy rules or when they've already used their full VA entitlement. Run numbers on both if you qualify for VA—most scenarios favor it heavily.
Yes, but it rarely makes financial sense. VA's zero down and no mortgage insurance beat FHA's 3.5% down plus permanent insurance premiums in almost every scenario.
FHA and VA both accept lower credit scores than conventional loans. VA often approves borderline credit more easily due to its residual income focus rather than strict debt ratios.
Neither thrills sellers compared to conventional or cash. VA's appraisal requirements can kill deals on older homes, while FHA's lower down payments signal weaker buyers to some agents.
No, you choose one loan type per purchase. Veterans sometimes use VA for their primary residence and FHA for multi-family investments if needed.
VA loans typically price 0.25% to 0.50% lower than FHA due to the government guarantee. Rates vary by borrower profile and market conditions.