When examining the home loan programs of the Federal Government, one may wonder whether a VA home loan or an FHA mortgage is more appropriate. There are definite differences between "military mortgages" and FHA loans. Some of the variations have to do with loan limits, others have to do with qualifying standards, while still others concern down payments and fees. One way to determine whether VA or FHA is right for a particular borrower is to weigh the advantages of both.

VA loans are available only to veterans and active military personnel who can obtain a Certificate of Eligibility. The Certificate shows that a person is eligible for the unique benefits of the VA Loan Guaranty Program. So, borrowers who are not VA eligible should consider an FHA loan.

The notable benefits of a VA loan are as follows:
o No Down Payment
o Up to 100% Financing on purchase and refinance loans
o In 2009 the Department of Veterans Affairs (VA) guarantees loans of up to $417,000 and more in certain geographic areas
o No Private Mortgage Insurance (PMI)
o Less Strict Credit and Income Requirements

Other benefits associated with VA loans include:
o Equal opportunity lending
o Buyer has access to appraisal
o Negotiable interest rate
o Funding fee may be financed
o Same or lower closing costs compared to those of some other loan programs
o Mortgage may be assumable
o No penalty for prepayment
o One-year builder's warranty or 10-year insurance-backed protection plan on dwellings proposed or under construction if local inspection is not available
o VA counseling for veteran borrowers in financial distress

FHA loans can provide similar benefits to those of VA loans. However, VA mortgages are still one of the only options available for zero down, 100% financing. By combining veteran mortgage benefits with county-centric loan limits, the VA home loan program is hard to beat for those who qualify. The 2009 county loan limits can make the VA loan guaranty amount even higher than the "maximum" $417,000 in certain U.S. counties.