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in Cloverdale, CA
Both FHA and VA loans make homeownership easier with government backing, but they serve different buyers. FHA works for anyone who qualifies, while VA requires military service.
In Cloverdale's competitive Sonoma County market, choosing the right loan affects your upfront costs and monthly payments. Veterans should almost always pick VA if eligible—the benefits are substantial.
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% plus annual premiums that run 0.55%-1.05% depending on your down payment.
These loans work well for first-time buyers and anyone rebuilding credit. Debt ratios can stretch to 50% or higher with compensating factors, making approval easier than conventional financing.
Loan limits in Sonoma County are $644,000 for single-family homes. Sellers can contribute up to 6% toward your closing costs, reducing cash you need at closing.
VA loans require zero down payment and charge no monthly mortgage insurance. You pay a one-time funding fee that ranges from 1.4% to 3.6% based on service type and whether it's your first VA loan.
Credit requirements are flexible—most lenders want 620 minimum, but the VA itself sets no floor. Debt ratios can exceed 50% if residual income guidelines are met, which measure actual cash left over after bills.
Sonoma County's VA loan limit is $644,000 before requiring a down payment on higher amounts. Sellers can pay up to 4% toward closing costs, and the VA prohibits certain junk fees that other loans allow.
The down payment gap is the biggest separator. FHA needs 3.5% minimum while VA requires nothing, saving veterans $22,540 on a $644,000 purchase in Cloverdale.
Monthly costs favor VA even more. FHA's mortgage insurance adds $300-600 monthly and never drops off unless you refinance. VA has no monthly insurance, cutting your payment significantly over 30 years.
Eligibility is the dealbreaker. VA requires military service with a Certificate of Eligibility. FHA accepts anyone who meets credit and income standards, making it the default for non-veterans seeking low down payments.
If you're eligible for VA, use it. The zero down payment and no mortgage insurance deliver thousands in savings versus FHA, and rates are better too. The only exception is if you've used your entitlement and lack enough remaining benefit for the purchase price.
FHA makes sense for non-veterans who can't meet conventional loan standards. Your credit is below 620, your down payment is under 5%, or your debt ratios push past 45%—FHA handles these scenarios better than conventional financing.
Veterans who've exhausted their VA entitlement can use FHA as a backup. Same for those buying investment properties, since VA only covers primary residences.
Yes, though most lenders want 620 minimum. The VA sets no credit floor, so some lenders approve scores in the high 500s with strong compensating factors.
Not unless you refinance. FHA insurance stays for the life of the loan if you put down less than 10%, which covers nearly all FHA borrowers.
FHA typically closes slightly faster—25 days versus 30 for VA. VA appraisals require additional inspections that can add time if repairs are needed.
Yes, but it rarely makes sense. You'd pay 3.5% down plus monthly insurance that VA doesn't require, costing thousands more over the loan term.
First-time VA buyers pay 2.15% with zero down, or 1.4% with 5%+ down. Disabled veterans pay no funding fee at all.
Most do, though some worry about appraisal requirements. Strong pre-approval and quick closing timelines overcome seller hesitation in competitive situations.