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in Hollister, CA
Both FHA and VA loans help Hollister buyers get into homes with less cash upfront than conventional mortgages require. The right choice depends entirely on whether you qualify for VA benefits and how much you can put down.
FHA loans work for anyone meeting credit and income standards. VA loans beat FHA on almost every metric but only serve military-connected borrowers.
FHA loans require just 3.5% down with a 580 credit score. You'll pay an upfront mortgage insurance premium of 1.75% plus annual premiums of 0.55% to 0.85% for the loan's life in most cases.
These loans cap at county conforming limits. Debt-to-income ratios can stretch to 50% with compensating factors, making approval easier for buyers with student loans or car payments.
VA loans require zero down payment for eligible veterans and service members. You pay a one-time funding fee of 2.3% for first use with no down payment, but no monthly mortgage insurance ever.
VA loans also cap at county limits. The program allows 100% financing even on higher-priced Hollister properties as long as you stay within those limits and qualify income-wise.
The funding fee versus mortgage insurance split matters more than most buyers realize. FHA's monthly MI adds $150 to $250 monthly on a typical Hollister home, while VA's one-time fee gets rolled into the loan with no ongoing cost.
VA loans generally offer lower rates than FHA because they're less risky for lenders. That rate advantage plus no monthly insurance means VA borrowers save $200 to $400 monthly compared to FHA on identical loan amounts.
If you have a Certificate of Eligibility from the VA, use it. The money you save over FHA pays for itself within the first year in most cases.
FHA makes sense when you're not military-connected or when you've already used VA entitlement on another property. Some Hollister buyers use FHA as a stepping stone, then refinance to conventional once they hit 20% equity to drop mortgage insurance.
Yes, if you have remaining entitlement. Many veterans keep enough to buy a second property or can restore benefits after selling the first home.
Only if you put down 10% or more initially. Then it drops after 11 years.
VA and FHA have similar credit and income standards. VA edges ahead because no down payment means less cash needed to close.
Both require the home to meet safety and livability standards. Major repairs must be completed before closing or structured through renovation loan versions.
Sellers sometimes worry VA appraisals are stricter, but both programs appraise similarly. A strong offer matters more than loan type in most cases.