FHA / VA Loans FHA and VA loans provide exceptional opportunities for first-time home buyers providing many benefits including little or no down payment. VA Loan Qualified veterans (Reserves and National Guard also qualify) can take out loans exceeding $200,000 with no down payment and flexible underwriting guidelines; closing costs may be a gift. VA-guaranteed loans can be combined with second mortgages and are assumable (upon qualifying) by any future buyer. Payments are fixed for the full term. FHA Loan Strictly speaking, FHA (the Federal Housing Administration) does not make a loan; rather it insures loans, which makes lenders willing to finance home purchases on favorable terms. With an FHA loan, the down payment can be as low as 2.25 percent for properties above $50,000 and 1.25 percent for properties below $50,000. Discount Points may be paid by either the seller or the buyer. FHA charges an up-front Mortgage Insurance Premium, similar to Private Mortgage Insurance, that can be financed in the mortgage amount or paid in cash at settlement. The borrower must also pay an annual Mortgage Insurance Premium of .50 percent which is collected monthly.