Most of the business I have done over the last 6 months has been Government business, particularly FHA. I wanted to post a quick comparison to illustrate the huge advantage presented to Veterans over other First Time Home Buyers.
The following comparison is for a $150,000 purchase, and both loans are 6.5% for comparison. Here in Madison, WI $3,600 is a pretty typical figure for annual taxes and Homeowners Insurance runs about $500/yr, but can be less.
FHA Loan
Down Payment (3%) $4,500
Principal and Interest Payment $933.45
Monthly Mortgage Insurance $60.63
Total Monthly Cost of FHA Loan $994.08
VA Loan
Down Payment (0% Down)
Principal and Interest Payment $968.49
Monthly Mortgage Insurance $0
Total Monthly Cost of VA Loan $968.49
You can see in this comparison the VA loan has 2 distinct advantages over the FHA loan, the first is the obvious lack of a down payment. If this were your home I'm sure you could think of something to do with that extra $4,500 you did not use for down payment. The other advantage is even with no down payment, the VA loan is $25.59 cheaper on a monthly basis than the FHA loan.
This illustration is intended to show Veterans, Realtors and Lenders the distinct benefits of using the Federal VA loan whenever possible.
It should be said the numbers in the above comparison include the 2.15% Funding Fee charged by the Veterans Administration and 1.5% Upfront Mortgage Insurance Premium charged on FHA Loans. FHA is considering implementing risk based MIP which would have an effect on this comparison. Furthermore Veterans with a service related disability would further reduce their cost, as the 2.15% VA funding fee can be waived.
If you are interested in learning more about the Federal VA Loan and how it can be used to benefit you, or a client please feel free to contact me for more information.
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