Comparison of Loan Programs: Conventional, FHA, or VA or more than one

Financing is available to veterans and nonveterans.

Financing available only to veterans and certain unremarried widows and widowers

Financing for one-family to four-family dwellings: owner-occupied or investor loans

Financing programs are for owner-occupied (1-4 family), residential dwellings.

Financing is limited to owner-occupied residential (1-4 family) dwellings; must sign occupancy certificate.

Generally requires a larger downpayment than the FHA or VA

Requires a larger down payment than VA

Normally does not require a downpayment

Requires appraisal by a licensed or certified appraiser.

Requires appraisal by a FHA-approved appraiser

Issues a Notice of Value (NOV) based on an appraisal by a VA-approved appraiser.

Maximum loan based on the lesser or the contract sales price or the appraised value; buyer may pay in cash the amount exceeding appraised value.

FHA valuation sets the maximum loan FHA will insure but does not limit the sales price; buyer may pay in cash the amount exceeding appraised value.

The VA loan may not exceed the appraised value of the home; buyer may pay in cash the amount exceeding appraised value.

No prepayment penalty if interest is 12% or more.

No prepayment penlty

On foreclosure, the lender receives the amount of insurance coverage and sells the property.

On default, foreclosure, and claim the FHA lender usually gets U.S. debentures

Following default, foreclosure, and claim, the lender usually receives cash.

Insures loan over 80% LTV with private mortgage insurance (PMI), payable to buyer in cash or added to note.

Insures the loan by way of mutual mortgage insurance; UFMIP payable at closing by buyer or seller; annual MIP paid monthly in the house payments.

Guarantees loans according to each veteran's personal entitlement

Second-lien financing is permitted concurrently with first lien as long as minimum down payment requirements are met.

No secondary financing is permitted until after closing

Secondary financing is permitted in exceptional cases.

Buyer may pay loan origination fee and discount points.

Buyer may pay discount points but cannot finance them in the loan. Buyer may pay up to 1% as a flat charge origination fee to the lender. A funding fee must be paid to the VA in addition to other fees; it may be paid by the buyer, it may be paid in cash or added to the note.

Loans are generally nonassemable; a lender may permit assumption with a qualified assumptor

Loans made prior to 12/1/86 are fully assumable; seller remains liable until loan is paid off. Loans made between 12/1/86 and 12/15/89 are fully assumable after 12 months on owner-occupied loans; seller remains liable for 5 years. Loans made since 12/15/89 require prior approval of assumptor; seller is released from liability.

Loan can be assumed without VA approval for loans made prior to 3/1/88; otherwise, approval is required. For loans originated after 3/1/88, release of liability is automatic if VA approves the assumption.