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in Lathrop, CA
Lathrop buyers often qualify for both FHA and VA loans but don't realize which one saves more money. Both programs offer lower barriers to entry than conventional financing, but VA loans eliminate costs that FHA requires.
The choice hinges on your military service history. If you're eligible for a VA loan, it beats FHA on nearly every financial metric—no down payment, no mortgage insurance, lower rates.
FHA loans require 3.5% down with a 580 credit score or 10% down between 500-579. You'll pay an upfront mortgage insurance premium of 1.75% plus annual premiums that don't drop off for loans over 90% LTV.
Debt-to-income ratios can stretch to 50% with strong compensating factors. FHA works well for first-time buyers in Lathrop who lack 20% down but don't qualify for VA benefits.
Sellers sometimes resist FHA offers due to stricter property condition requirements. Appraisers flag issues like peeling paint or broken railings that conventional loans might overlook.
VA loans require zero down payment and charge no monthly mortgage insurance. You pay a one-time funding fee—typically 2.3% for first-time use with zero down—that gets rolled into the loan.
Credit score minimums vary by lender, but most approve 620+ scores. VA allows higher debt ratios than conventional loans and counts only 5% of student loan balances in calculations.
The program limits what lenders can charge in fees and bans prepayment penalties. San Joaquin County veterans get better terms than almost any other financing option available.
The funding fee gap matters less than mortgage insurance. FHA charges 0.55%-0.80% annually on your full loan amount forever with less than 10% down—VA has no ongoing premium after the upfront fee.
On a $500,000 Lathrop purchase, FHA costs $229 monthly in mortgage insurance while VA pays zero. That's $2,748 per year or $82,440 over 30 years in savings.
Property requirements differ slightly but both need working systems and structural soundness. VA appraisers check for wood-destroying pests while FHA focuses on safety hazards.
Use VA if you're eligible—period. The monthly savings from no mortgage insurance outweigh FHA's slightly lower credit requirements, especially in California where home prices amplify the premium difference.
Choose FHA only if you don't qualify for VA benefits or you've already used your entitlement on another property. Some veterans can restore eligibility or use remaining entitlement for a second VA loan.
A 540 credit score makes FHA your only government option since VA lenders rarely approve below 580. But if you're at 600+ with military service, VA delivers better terms every time.
Yes, if you have remaining entitlement or plan to sell your current VA-financed home. Some veterans qualify for multiple VA loans simultaneously.
Both take 30-45 days typically. VA loans may add a few days for Certificate of Eligibility processing if you haven't obtained it yet.
Sellers often prefer conventional financing over both. But VA offers with zero down compete well since buyers demonstrate income stability through military service.
Yes, through a VA cash-out or rate reduction refinance. This eliminates mortgage insurance and often lowers your rate substantially.
It increases to 3.6% for zero down on second use. Veterans with service-connected disabilities pay no funding fee at all.