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in Sebastopol, CA
Both FHA and VA loans help buyers secure financing with less cash upfront than conventional mortgages require. The difference is who qualifies and what you pay over time.
If you served in the military, VA wins on almost every metric. If you didn't, FHA is your path to homeownership with a smaller down payment than conventional loans demand.
FHA loans require 3.5% down with credit scores as low as 580. You pay upfront mortgage insurance (1.75% of the loan) plus annual premiums for the loan's life.
Debt-to-income ratios stretch to 50% in most cases, and sellers can contribute up to 6% toward closing costs. This makes FHA the default choice for first-time buyers without military service.
VA loans require zero down payment and charge no monthly mortgage insurance. You pay a one-time funding fee (2.3% for first use, waived for disabled vets) that rolls into the loan.
Lenders typically want 620+ credit, though some go lower. VA caps your total debt payments and doesn't set a maximum loan amount, so Sebastopol's pricier homes stay in reach.
The gap in total cost is massive. On a $650,000 Sebastopol home, FHA costs you $22,750 down plus $400/month in mortgage insurance. VA costs zero down and no monthly insurance.
Eligibility is the only gate. VA demands service history (90+ days active duty or 6+ years Guard/Reserve). FHA just needs income verification and a pulse.
If you qualify for VA, use it. The savings over 30 years exceed $140,000 compared to FHA on a typical Sebastopol purchase. Zero down plus no insurance makes it unbeatable.
If you're not a veteran, FHA delivers lower down payments and easier credit requirements than conventional loans. Just refinance to conventional once you hit 20% equity to drop that insurance.
Yes, both programs work throughout Sonoma County. VA has no loan limits here, and FHA caps at $766,550 for single-family homes in 2024.
VA rates typically run 0.25-0.50% lower than FHA. Rates vary by borrower profile and market conditions, but VA's government guarantee keeps costs down.
Sellers often favor VA because appraisals are stricter, protecting them from post-inspection renegotiation. FHA carries a reputation for pickier property standards, sometimes unfairly.
Both have renovation versions (FHA 203k and VA Renovation). Standard versions require the home to be move-in ready with no safety or structural issues.
FHA lenders approve 580+ regularly. VA lenders typically want 620+, though we've closed deals at 580 with strong compensating factors.