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VA Loans Outperform FHA Loans. Why? And What Can We Learn?

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Document date: July 16, 2014
Released online: July 16, 2014
Veterans Administration (VA) loans have consistently performed better than Federal Housing Administration (FHA) loans. In this commentary, we take a closer look at both programs to identify why VA loans perform better. We conclude that the residual income test may be a critical differentiating factor and suggest that regulators evaluate whether the test might be a good supplement to FHA’s current assessment of a borrower’s ability to pay.


Topics/Tags: | Housing


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