Re: Evaluating Convention
al vs. FHA
07-22-2010 11:27 AM
"VA is a good option when available and when putting less than 15% down. With 15% down or more, and FICO scores of 660 or higher, conventional starts gaining an advantage over VA since the mortgage insurance won't be much on conventional vs. the VA funding fee, and at 20% down conventional is almost always the better bet."
Not sure that I agree with this...all VA bias aside.
Nearly every lender's VA rates are lower than conventional, usually by .25%. If a borrower puts 20% down on a Conventional and 20% down on a VA, even with the funding fee, the lower interest rate on the VA loan still results in a lower monthly payment. This can be increased even moreso if on the VA loan some of that 20% down payment is used instead to buy down the interest rate. For the same amount invested in the deal, VA wins.
Also, in this buyers market we are in, the flexibility VA offers in allowing sellers to pay any and all the buyers closing costs gives VA another clear advantage.