%0 Journal Article %A Laurie S. Goodman %A Ellen Seidman %A Jun Zhu %T VA Loans Outperform FHA Loans—Why? And What Can We Learn? %D 2014 %R 10.3905/jfi.2014.24.3.039 %J The Journal of Fixed Income %P 39-51 %V 24 %N 3 %X Veterans Administration (VA) loans have consistently performed better than Federal Housing Administration (FHA) loans. In this article, the authors take a closer look at both programs to identify why VA loans perform better. They 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 the FHA’s current assessment of a borrower’s ability to pay.TOPICS: MBS and residential mortgage loans, legal/regulatory/public policy %U https://jfi.pm-research.com/content/iijfixinc/24/3/39.full.pdf