Insure, guarantee, lend
FHA insures loans made by approved lenders, VA guarantees them, and neither ordinarily lends money — VA's Native American Direct Loan is the narrow exception.
FHA down payment and MIP
With a decision credit score of 580 or higher, FHA requires a minimum investment of 3.5%, a 96.5% maximum LTV. On a $300,000 purchase that is $10,500. The 10% requirement applies only to scores of 500-579, and 3% is conventional 97% LTV financing, not FHA.
Upfront MIP is 1.75% of the base loan amount, not of the sales price. Base loan = $300,000 − $10,500 = $289,500, so UFMIP = $289,500 × 0.0175 = $5,066.25, and the total financed becomes $294,566.25. The annual MIP is a separate premium, 0.55% of the base loan, $1,592.25 a year, paid monthly.
The cancellation trap
With LTV above 90% at origination, FHA annual MIP lasts the life of the loan. Conventional PMI must terminate automatically at 78% of original value under the Homeowners Protection Act. Government-insured loans are expressly not covered by the HPA, so the 80% written request and 78% automatic rules never apply to FHA. When LTV is 90% or less at origination, MIP drops off after 11 years.
The 203(k) programs
The Limited 203(k) covers non-structural rehabilitation with total rehab costs up to $75,000 and no required consultant, so $60,000 of cosmetic and roofing work qualifies. The $35,000 ceiling applied only before case numbers assigned on or after November 4, 2024. Section 203(b) is the basic purchase program and finances no rehabilitation.
VA funding fee and entitlement
The first-use purchase funding fee with less than 5% down is 2.15%: $350,000 × 0.0215 = $7,525, and it may be financed. The 3.30% rate is subsequent use, 1.50% applies with 5-9.99% down, and 1.75% is FHA's UFMIP.
Since the Blue Water Navy Vietnam Veterans Act took effect January 1, 2020 there is no VA loan limit with full entitlement, and VA guarantees 25% of the loan above $144,000. Basic entitlement of $36,000 covers 25% of loans up to $144,000 and is not a required down payment. The $832,750 conforming limit controls only for partial remaining entitlement.