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FHA and VA Mortgage Programs

Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) loans are popular homebuyer choices, but are also available if you’re refinancing your mortgage.1 These loans must meet certain requirements.

FHA Loan

FHA Loan: Streamlined refinances. Available for a variety of loan terms. Typically requires mortgage insurance.
 

Features

  • Available in a variety of fixed-rate and adjustable-rate loan options.
  • May allow you to use a gift or grant for all or a portion of your closing costs.
  • Gives current FHA homeowners the possibility of getting an FHA Streamline Refinance.
  • You typically have to pay upfront and monthly FHA mortgage insurance premiums.

VA Loan

VA loans: Streamlined refinances. Financing for eligible service members. One-time funding fee typically required.
 

Features

  • Provides financing for qualified veterans, reservists, active duty personnel, or eligible family members.
  • Available in a variety of fixed-rate and adjustable-rate loan options.
  • Allows closing costs to come from a gift or grant.
  • Gives current VA homeowners the possibility of getting a VA-to-VA refinance.

Benefits

  • Requires less cash upfront for your down payment.
  • Available for all income levels.
  • Allows a new buyer to take over the loan if you sell your home (subject to loan approval)
  • Provides reduced paperwork if you're eligible for an FHA Streamline Refinance.
  • A co-applicant can help you qualify even though they do not live in the home.

Benefits

Considerations

  • Be certain to ask your home mortgage consultant to help you compare the overall costs of all products, including the monthly and long-term costs and conditions of the required mortgage insurance.
  • You can typically only have one FHA mortgage at any given time.
  • In many instances, you may find FHA to be a more expensive financing option and should be considered after thoroughly evaluating all other product options that meet your credit qualifying and financial needs.

Considerations

  • You typically have to pay a one-time VA funding fee that can be financed into the loan amount.
  • You can get financing for your primary residence only.
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FHA Mortgage Insurance

 
The Federal Housing Administration (FHA) provides mortgage insurance on loans made by approved lenders. FHA mortgage insurance provides lenders with protection against losses against mortgage payment default. The cost of the mortgage insurance is paid by the homeowner as an upfront amount which is usually financed into the loan amount, as well as an amount that is included in the monthly mortgage payment. The amount of mortgage insurance paid on an FHA loan is dependent on the base loan amount, loan term and loan-to-value (LTV) ratio.
 
 
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Funding Fee

 
You are typically required to pay a one-time funding fee on VA loans. This fee ranges from 0.5 to 3.30 percent, depending on your service type, prior use of VA eligibility, and type of loan transaction.
 
 
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Interest Rate Reduction Refinance Loan (IRRRL)

 
An Interest Rate Reduction Refinancing Loan (IRRRL) can be done only when the veteran already has his or her entitlement used for a VA loan on the property to be refinanced. In other words, it must be a VA to VA refinance reusing the veteran-applicant's entitlement.
 
 
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Private Mortgage Insurance

 
Insurance written by a private company protecting the mortgage lender against loss resulting from a mortgage default.
 
 
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Mortgage insurance (MI)

 
Mortgage insurance protects the lender against a loss if a borrower defaults on the loan. On conventional (non-government) loans, private mortgage insurance (PMI) is usually required if your loan amount is greater than 80% of the home’s value. On government-backed FHA loans, mortgage insurance is usually required in the form of both an upfront premium, as well as a monthly premium. The amount of mortgage insurance paid on an FHA loan is dependent on the base loan amount, loan term and loan-to-value (LTV) ratio.
 
 
 
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If you are a servicemember on active duty, prior to seeking a refinance of your existing mortgage loan, please consult with your legal advisor regarding the loss of any benefits you are entitled to under the Servicemembers Civil Relief Act or applicable state law.
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