from Florida Realtor Magazine, December 2007 | page 31

Advantages of FHA and VA Loans

Since 1934, the Federal Housing Administration (FHA) has been insuring home loans, reducing the risk to lenders and helping buyers complete the transaction. Today, FHA loans require a low 3 percent down payment, and the money may come from a family member, employer or charitable organization as a gift. Most closing costs and fees may be included in the loan.

FHA loans are particularly suitable for
• First-time buyers
• Buyers who can afford only a modest down payment
• Buyers who want to keep monthly payments as low as possible
• Buyers who don’t have a perfect credit rating
Conventional loans usually require a larger down payment. And, if your customers have less than a perfect credit rating, they may not qualify for many conventional loans and find themselves being offered loans with higher interest rates and/or fees than they expected.

The best thing for your customers to do is compare the cost of the conventional loan to an FHA loan, line by line. What are the fees on each? What is the interest rate? How much is the mortgage insurance on each? How much down payment is required? For some borrowers, a conventional loan may be less expensive than an FHA loan. For many others, it will be more expensive.

Eligible veterans may qualify for VA home loan benefits by presenting acceptable proof of service. In many cases, no down payment is required.

For more information, go to www.fha.gov/buyer/loans or www.homeloans.va.gov.