Overview
VA loans are the best mortgage product available — if you qualify. With zero down payment, no mortgage insurance, and competitive rates, VA loans save eligible veterans and service members tens of thousands of dollars. FHA and conventional loans serve borrowers who don't have VA eligibility, each with their own tradeoffs.
Side-by-Side Comparison
| Feature | VA Loan | FHA / Conventional |
|---|---|---|
| Down Payment | 0% (zero down) | FHA: 3.5% | Conv: 3-20% |
| Mortgage Insurance | None (VA funding fee instead) | FHA: MIP for life | Conv: PMI until 80% LTV |
| Funding Fee / Upfront Cost | 1.25-3.3% (waived for disabled vets) | FHA: 1.75% upfront MIP | Conv: None |
| Credit Score | No VA minimum (lenders typically want 620+) | FHA: 500-580 | Conv: 620+ |
| DTI Limit | No hard limit (41% guideline) | FHA: 43-50% | Conv: 43-45% |
| Interest Rates | Lowest (0.25-0.5% below conventional) | FHA: Low | Conv: Moderate |
| Loan Limits | No limit (with full entitlement) | FHA: $498K-$1.15M | Conv: $766K-$1.15M |
| Eligibility | Veterans, active duty, some Guard/Reserve | Anyone who qualifies |
| Assumable | Yes | FHA: Yes | Conv: No |
Pros & Cons
VA Loan
Advantages
Zero down payment required
No monthly mortgage insurance — ever
Lowest interest rates of any loan type
No loan limits with full entitlement
More lenient DTI and credit requirements
Funding fee can be rolled into the loan
Loan is assumable (huge benefit in high-rate environments)
Disadvantages
Only available to eligible veterans and service members
VA funding fee (1.25-3.3%) adds to loan cost
Property must meet VA minimum property requirements
Can only be used for primary residence
FHA / Conventional
Advantages
Available to all borrowers (no military service required)
FHA: Very low credit score requirements (500+)
Conventional: PMI cancellable at 80% LTV
Can be used for investment properties (conventional)
Wider lender availability
Disadvantages
Down payment required (3-20%)
Mortgage insurance costs (FHA: lifetime MIP; Conv: PMI)
Higher interest rates than VA
Stricter DTI limits
When to Choose Each Option
Choose VA Loan if...
If you have VA eligibility, use it. VA loans are almost always the best option for eligible borrowers. The only exceptions are if you're buying an investment property (VA is primary residence only) or if you've already used your full VA entitlement.
Choose FHA / Conventional if...
Choose FHA if you don't have VA eligibility and your credit score is below 680. Choose conventional if your credit is 700+ and you can put at least 5% down. Conventional becomes the clear winner once you can put 20% down (no PMI).
The Bottom Line
VA loans are the gold standard of mortgage products. If you're eligible, there's rarely a reason to choose anything else for a primary residence. For non-VA borrowers, the FHA vs conventional decision comes down to credit score and down payment — see our FHA vs Conventional comparison for that breakdown.
Run the Numbers
Frequently Asked Questions
For primary residences, almost always yes. The zero down payment and no PMI make VA loans significantly cheaper. The only scenario where conventional might win is if you have 20%+ down and want to avoid the VA funding fee.
Yes. VA loan entitlement is reusable. You can use it multiple times as long as you pay off or sell the previous VA-financed property. Some veterans can even have two VA loans simultaneously.
The VA funding fee is a one-time fee (1.25-3.3% of the loan) that funds the VA loan program. It's waived for veterans with service-connected disabilities. It can be rolled into the loan amount so you don't pay it upfront.