Brief VA Loans Outperform FHA Loans. Why? And What Can We Learn?
Laurie Goodman, Ellen Seidman, Jun Zhu
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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 FHAs current assessment of a borrowers ability to pay.
Research Areas Housing finance Housing
Tags Federal housing programs and policies
Policy Centers Housing Finance Policy Center