Homebuyers who enter the housing market in Georgia have plenty of research to do before purchasing a home. Most people require assistance with financing because they don’t have enough cash to buy a home.
FHA and VA loan products offer viable alternatives if you cannot afford a conventional mortgage or if you qualify for these products. These loans serve different financial needs and have varying qualification standards, such as a minimum credit score. Securing an FHA or VA loan in Georgia can make your dream of homeownership more realistic.
What is an FHA Loan?
A Federal Housing Administration loan is backed by the federal government and offered by individual mortgage lenders. The government insures these products to help low and moderate-income borrowers afford homes. In most cases, FHA borrowers have lower credit scores, less income, or smaller down payments.
Lenders may have more flexible loan terms, such as a lower minimum credit score, debt to income ratio, or require less money for a deposit. The flexible requirements mean borrowers may qualify for this mortgage loan if they aren’t eligible for conventional loans.
What is a VA Loan?
These government-backed loans are only offered to military veterans, active-duty service members, or eligible surviving spouses. The Department of Veterans Affairs provides insurance for them, allowing lenders to offer more favorable terms compared to conventional loans. The purpose of the VA loan program is to help those who have served our country afford homes.
Eligibility Requirements for FHA Loans in Georgia
Although FHA loans are easier to qualify for than conventional financing, there are still some eligibility criteria to meet. Typically, the minimum credit score requirements are around 580. The minimum down payment requirement is 3.5%, which rises to 10% if your credit score falls below 580.
No income limits exist for the maximum loan as long as you can afford the monthly mortgage payment. A lender may use debt-to-income to assess your risk just like with conventional mortgages, and the maximum debt-to-income ratio for an FHA loan is typically 50%. FHA loans require:
- Income to make the monthly payment
- Mortgage insurance requirements for the loan term
- Home loan can’t exceed the maximum loan amount
- Purchase price can’t be above the appraisal value
- Verifiable monthly income
- Proof of gross income, such as check stubs or tax documents
- The home loan can’t be used for investment properties
These loans are ideal for first time buyers or those who need a loan for their primary residences.
Eligibility Requirements for VA Loans in Georgia
Only certain people can qualify for a VA loan. You must provide documentation that proves your record of military service. Here are the general requirements for military service to qualify for a VA loan in Georgia:
- At least 90 days of non-training active duty.
- At least 90 days of active duty with at least 30 consecutive days.
- 181 continuous days during peacetime.
- 6 creditable years in the National Guard.
You must present a Certificate of Eligibility when applying for your VA mortgage.
An eligible family member may access VA loan benefits in specific circumstances. Home buyers can be co-borrowers on loans if they are an unmarried child and meet eligibility requirements. Eligible surviving spouses may qualify for loans if they meet requirements and their spouse passed away on active duty.
Down Payment Requirements: FHA vs. VA Loans
The down payments make them more appealing options for Georgia homebuyers. With an FHA loan, a down payment of 3.5% is required to acquire financing. A VA loan offers a zero-down payment option so that you can finance the entire price of the home. With a conventional loan, lenders may require a larger down payment of 10-20% for first-time buyers.
You can take advantage of down payment assistance programs in the state if the down payment is unaffordable. Specifically, the Georgia Dream Homeownership Program is perfect for those needing help with upfront costs.
Interest Rates for FHA and VA Loans in Georgia
The interest rate on your loan affects the total loan amount you will pay and the monthly payment cost. FHA and VA home loans offer more competitive interest rates than the typical mortgage. However, VA mortgages provide an even lower interest rate than an FHA mortgage.
Mortgage Insurance: FHA vs. VA Loans
One of the ways lenders account for additional risk is by charging private mortgage insurance to borrowers. An FHA loan will almost always have an annual private mortgage insurance premium. On the other hand, a VA mortgage loan has no insurance premium, even if you opt for no down payment. However, a VA funding fee is considered a closing cost.
Loan Limits in Georgia: FHA vs. VA Loans
FHA loan limits control how much money you can borrow to buy a house. The standard loan limit for a single-family home in Georgia is $524,225 as of 2025. However, in some counties, such as Gwinnett, DeKalb, and Cobb, the loan limit rises to $688,850.
If you are applying for a VA loan, there is no limit to the amount you can borrow. There is a limit on how much the VA will guarantee. In most counties, this limit is $806,500 for a single-family dwelling. VA loans offer more financing to help families afford their dream home. If the purchase price is higher than the loan value, a VA loan can help cover a portion of the purchase.
Closing Costs and Fees
The expenses you pay when you close on a home are called closing costs. Federal Housing Administration loans include typical expenses like title search fees, loan origination expenses, prorated property taxes, and attorney fees. There is also the annual mortgage insurance premium. You should expect to pay 2-5% of the home’s sale price in closing costs.
VA mortgages have reduced closing expenses, but the primary additional payment is the VA funding fee, usually 1.25-3.3%.
Credit Score Requirements: FHA vs. VA Loans
FHA mortgages have flexible credit score requirements. You will likely need a 580 or higher to qualify, though a lender could accept a lower credit score depending on your other finances.
The minimum credit requirements for VA financing are higher, typically around 620 or more. The higher your credit score, the more likely you will qualify for these products.
Property Types Eligible for FHA and VA Loans
Properties must meet FHA standards to qualify for this government-backed financing. First, they must become the primary residence of the buyer. You cannot purchase a second home or investment property with FHA government-backed loans, though you can buy multi-family properties. This is also the case with VA mortgages since you can only purchase a primary residence.
Appraisal Process for FHA and VA Loans
An FHA appraisal is required for all properties purchased with this type of financing. A VA appraisal is also quite strict, assessing the home's real value before the purchase. Appraisals for conventional loans are much more lax in their assessments.
Benefits of FHA Loans for Georgia Homebuyers
Homeownership is accessible to more borrowers with FHA financing. Whether buyers have lower credit scores, smaller down payments, or less income to work with, these loans make purchasing a home a more affordable option if conventional financing fails.
Benefits of VA Loans for Georgia Veterans
A VA loan is even more appealing in terms of affordability. The zero-down payment option, no mortgage insurance, and competitive interest rates ensure homes are affordable for qualified veterans, active-duty service members, and surviving spouses.
Drawbacks of FHA Loans
FHA loans are more affordable, but they do come at a cost. You may end up paying more for mortgage insurance than the average borrower. Although you will save on other expenses, an additional monthly premium will impact your budget.
Drawbacks of VA Loans
Properties must pass a much stricter appraisal process to be eligible for VA funding, so your options may be limited. Plus, you must pay that VA funding fee, which can add to the upfront costs.
Choosing Between FHA and VA Loans: What to Consider
You must consider numerous factors when choosing between these types of loans, especially eligibility, financial situation, and long-term goals. A VA mortgage is generally the most affordable option. However, a lower credit score may force you to pursue an FHA loan instead.
Georgia-Specific Resources for FHA and VA Loans
Navigating the mortgage process in Georgia may require some professional assistance. Finding an experienced lender, such as TrueWay Mortgage, can make it easier to understand these products. You can also take a homebuyer education course to learn more about becoming a homeowner. The Georgia Dream Homeownership Program and Georgia Homeownership Assistance Program can reduce the upfront costs of purchasing a house.
Conclusion: FHA vs. VA Loan in Georgia
You must assess your situation to choose between FHA and VA mortgage loans. FHA mortgages are outstanding for borrowers with lower credit scores and less income. VA loans make homeownership accessible for qualified veterans and active-duty service members.
Speak with an expert at TrueWay Mortgage today to learn more about these products by calling 404-962-0032.
