Side by side

	VA	FHA	Conventional
Minimum down	0%	3.5% (580+), 10% (500–579)	3% (HomeReady/Home Possible), else 5%
Programme credit minimum	None	580 / 500 tiers	None via automated underwriting; 620 manual
Monthly mortgage insurance	None	MIP — life of loan at 3.5% down	PMI — cancels at 80% LTV
Upfront charge	Funding fee 1.25%–3.3%, often exempt	1.75% upfront MIP	None typically
Loan limit	None with full entitlement	$541,287 floor, $1,249,125 ceiling (2026)	$832,750 baseline (2026)
Who can use it	Eligible veterans, service members, some surviving spouses	Anyone	Anyone
Property condition standard	VA Minimum Property Requirements	FHA appraisal standards	Lender/appraiser standards

If you are eligible for VA, use VA

It is not close. No down payment, no monthly mortgage insurance at any loan-to-value, no loan limit with full entitlement, and no programme minimum credit score.

The only charge is a one-time funding fee, which can be financed — and substantial categories of borrower pay nothing at all, including anyone receiving VA compensation for a service-connected disability.

The one place VA can lose is a competitive bidding war, where sellers sometimes prefer conventional offers because of the Minimum Property Requirements. That is a market-conditions problem, not a loan-quality problem.

FHA versus conventional: the real decision

For everyone else, this is the choice, and it comes down to mortgage insurance.

FHA is more forgiving on credit. It goes down to 580 at 3.5% down, and to 500 at 10% down. It is more permissive on debt-to-income and on recent credit history.

Conventional lets the insurance stop. PMI cancels — on request at 80% loan-to-value of the original value, automatically at 78%, and in all cases at the amortisation midpoint under the Homeowners Protection Act.

FHA's mortgage insurance at 3.5% down does not stop. At 96.5% loan-to-value, annual MIP runs for the life of the loan. On a $300,000 loan at 0.55%, that is roughly $1,650 a year with no end date. The only exit is refinancing out of FHA, which requires qualifying for a conventional loan later.

So the question is: can you qualify conventional?

• Credit 680 or above, debt-to-income under 40% → conventional is very likely cheaper over the life of the loan, even if the rate quoted is slightly higher.
• Credit 580 to 660, or a recent blemish → FHA is probably the route that gets you approved. Take it, and plan to refinance once your credit recovers and you have equity.
• Income under 80% AMI with decent credit → look at HomeReady or Home Possible. 3% down, conventional pricing, cancellable insurance. This is the combination most people miss.

Two things that often decide it in practice

Seller preference. In a competitive market, sellers sometimes discount FHA and VA offers on the assumption that the appraisal is stricter. This is not always rational, but it is real.

Property condition. FHA and VA both have property standards. If you are buying something that needs work, a conventional loan may be the only one that can close on it — or you may need a renovation loan product.

What to do with this

Get Loan Estimates for more than one programme from more than one lender, in the same week. They use a standard format precisely so you can compare them directly.

Compare the total cost over the period you expect to hold the loan, not just the rate. A quarter-point higher rate with cancellable PMI usually beats a lower rate with permanent MIP within five to seven years.