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in Montague, CA
Both FHA and VA loans get backed by the federal government, but they serve different borrowers with different terms. In Montague's rural Siskiyou County market, these government programs often make the difference between qualifying and getting priced out.
FHA loans work for any buyer who meets the requirements. VA loans require military service but offer better terms—if you qualify for VA, it usually beats FHA by a significant margin.
FHA loans require just 3.5% down if your credit score hits 580. You'll pay mortgage insurance for the life of the loan—0.85% annually plus an upfront premium of 1.75%.
Credit standards stay flexible compared to conventional loans. Most lenders approve borrowers at 580, and some go as low as 500 with 10% down. Debt-to-income can stretch to 50% with strong compensating factors.
Property limits in Siskiyou County cap FHA loans at the standard floor. The home must meet FHA appraisal standards, which can be stricter than conventional—expect scrutiny on older rural properties.
VA loans require zero down payment for eligible veterans and service members. You pay a funding fee instead of mortgage insurance—typically 2.3% for first use with no down payment, but it can be financed into the loan.
No monthly mortgage insurance ever. That difference saves $100-$200 monthly compared to FHA on most Montague home purchases—roughly $30,000 over ten years.
VA doesn't set a minimum credit score, though most lenders want 620. The program allows 100% financing with no PMI, plus sellers can pay all closing costs. Property must meet VA appraisal standards and pass a termite inspection.
Down payment separates these loans most clearly. FHA needs 3.5% minimum while VA allows zero down—on a $300,000 Montague home, that's $10,500 versus nothing out of pocket.
Monthly costs differ even more. FHA charges 0.85% annual mortgage insurance that never drops off. VA has no monthly insurance, just a one-time funding fee you can finance. Over time, VA saves significantly more than the funding fee costs.
Eligibility splits cleanly: anyone can use FHA if they qualify financially, but VA requires military service. If you're a veteran, VA almost always wins unless you have a VA disability rating that waives the funding fee—then it wins by even more.
If you're eligible for VA, use it. The zero down and no monthly MI make it the strongest residential mortgage program available. Even with the funding fee, you come out ahead within two years compared to FHA.
FHA makes sense when you can't use VA or when the property doesn't meet VA standards. Rural Montague properties sometimes have well or septic issues that VA won't approve but FHA will accept with repairs. FHA also works for buyers still building credit below 620.
Run the numbers on funding fee versus mortgage insurance for your specific scenario. A $250,000 loan costs about $213 monthly in FHA mortgage insurance forever, while VA charges roughly $5,750 one time. You break even in 27 months, then save $2,550 every year after.
Yes, both work in Siskiyou County. VA and FHA approve rural properties including homes on larger lots with wells and septic systems, though each has specific property standards.
VA has lower payments due to no mortgage insurance. On a $250,000 loan, expect to save $200+ monthly compared to FHA with its lifetime 0.85% annual MI.
No. FHA accepts 580 credit scores with 3.5% down. VA has no minimum score from the program itself, though most lenders want 620 or higher.
FHA allows sellers to contribute up to 6% toward costs. VA allows up to 4% and permits sellers to cover all buyer closing costs if negotiated.
Both programs require properties to meet safety standards. FHA allows more repair flexibility than VA, which has stricter requirements around defects and mechanical systems.
First-time use with zero down costs 2.3% of the loan amount. On $300,000, that's $6,900—financeable into the loan so you don't pay upfront.