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in Lincoln, CA
Both FHA and VA loans offer government backing with lower barriers to entry than conventional mortgages. The right choice depends entirely on whether you qualify for VA benefits and how much cash you can put down.
Lincoln buyers often choose between these two when they lack the 20% down payment conventional lenders prefer. Each has distinct advantages that make sense for different borrower profiles.
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% and annual premiums of 0.55% to 0.85% depending on your loan size and down payment.
These loans work well for first-time buyers in Lincoln who have steady W-2 income but limited savings. The catch is you're stuck with mortgage insurance for the life of the loan unless you put down 10% or more upfront.
Debt-to-income ratios can stretch to 50% with compensating factors. FHA is also more forgiving of past credit issues like bankruptcies or foreclosures after mandatory waiting periods.
VA loans require zero down payment and charge no monthly mortgage insurance. You'll pay a one-time funding fee between 1.4% and 3.6% depending on service type and whether it's your first VA loan use.
Rates typically run 0.25% to 0.5% lower than FHA because the government guarantee is stronger. Sellers can also pay up to 4% of the purchase price toward your closing costs, making these the most cash-efficient loans available.
Lincoln veterans with VA eligibility should almost always use this benefit. The only downside is stricter property condition requirements that can complicate fixer-upper purchases.
The math heavily favors VA if you're eligible. On a $500,000 Lincoln home, FHA needs $17,500 down plus $8,750 upfront insurance. VA needs nothing down with a $14,000 funding fee that can be financed.
Monthly payments diverge even more. That FHA loan carries $200+ in mortgage insurance every month. VA has zero ongoing insurance, saving you $2,400+ annually for as long as you hold the loan.
Credit flexibility slightly favors FHA for borrowers below 620. VA lenders typically want 620 minimum despite no official floor. Both allow higher debt ratios than conventional loans, though VA can be more flexible with residual income calculations.
If you have valid VA eligibility, use it. The zero-down structure and lack of mortgage insurance make it the strongest loan program available. You'd need extraordinary circumstances to justify FHA over VA when you qualify for both.
FHA makes sense for Lincoln buyers without military service who can't save 20% down. It's also useful when the property doesn't meet VA condition standards or when the seller refuses VA financing due to appraisal concerns.
One edge case: if you're buying investment property or a multi-unit building you'll occupy, FHA allows up to four units with 3.5% down. VA also covers multi-units but with stricter occupancy requirements.
Yes. You can reuse VA benefits after selling a previous VA-financed home or have enough remaining entitlement for a second property simultaneously.
Only if you put 10% or more down, then it drops after 11 years. Otherwise it stays for the entire loan term until you refinance.
FHA typically closes slightly faster because VA appraisals include stricter property inspections. Budget 30-45 days for either.
FHA has a 2024 limit of $498,257 for single-family homes. VA has no limit but funding fees increase above $726,200.
FHA 203(k) renovation loans exist but have strict requirements. VA rarely approves homes needing significant repairs.