FHA, VA, and Conventional Loans Side by Side

Why Loan Type Matters Before You Shop

When you start shopping for a home, you'll quickly discover that not all mortgages work the same way. The three most common types — FHA, VA, and conventional — differ in who can use them, how much you need upfront, and what you'll pay over the life of the loan. Choosing the right loan structure is one of the most consequential early steps in the homebuying process. For a full picture of where this decision fits, see our complete homebuying walkthrough.

Each loan type is backed or regulated differently. FHA loans are insured by the Federal Housing Administration, VA loans are guaranteed by the U.S. Department of Veterans Affairs, and conventional loans are not government-backed — they conform to guidelines set by Fannie Mae and Freddie Mac. That structural difference shapes everything from qualification requirements to how lenders price your interest rate.

Eligibility and Who Each Loan Is Designed For

FHA loans are open to most U.S. borrowers who meet income and credit thresholds. The FHA accepts credit scores as low as 580 for the minimum 3.5% down payment option, or as low as 500 with a 10% down payment — making these loans a common entry point for first-time buyers or those rebuilding credit.

VA loans are available only to veterans, active-duty service members, National Guard and Reserve members who meet service requirements, and eligible surviving spouses. There is no required minimum credit score set by the VA itself, though individual lenders generally set their own minimums. Critically, VA loans require no down payment in most cases.

Conventional loans are available to any qualified borrower but typically require a credit score of at least 620, and the most competitive rates generally go to borrowers with scores above 740. Down payments can range from 3% to 20% or more, depending on the lender and loan program.

Costs: Insurance, Fees, and What You'll Pay Long-Term

Beyond the interest rate, each loan type carries its own cost structure that affects your monthly payment and total repayment.

FHA loans require an upfront mortgage insurance premium (MIP) — currently 1.75% of the loan amount — plus an annual MIP paid monthly. For most FHA borrowers, this insurance stays for the life of the loan unless you refinance into a conventional product once you have sufficient equity.

VA loans charge a one-time funding fee that varies based on your service history, down payment amount, and whether it's your first VA loan. This fee can be rolled into the loan. Importantly, VA loans require no ongoing private mortgage insurance (PMI), which can generate meaningful savings over time.

Conventional loans require PMI only when your down payment is below 20%. Once your equity reaches 20%, you can request PMI cancellation — it does not automatically persist for the life of the loan as FHA's MIP often does.

You'll also want to understand how your rate structure affects cost. Whether you choose a fixed or adjustable rate applies across all three loan types — see our fixed vs. adjustable rate comparison for more detail.

Matching the Right Loan to Your Situation

If you have qualifying military service, a VA loan is generally worth exploring first due to the absence of a down payment requirement and no ongoing PMI. If you're a civilian first-time buyer with modest savings or a credit score in the mid-600s, an FHA loan may remove barriers that a conventional loan would not. If your credit is strong and you can put down 10–20%, a conventional loan often delivers better long-term economics — especially the ability to shed PMI.

Before applying, getting pre-approved is a critical next step that forces you to verify which loan type you actually qualify for. Our guide on getting pre-approved for a home loan walks through what lenders review and what documents to prepare.

Still weighing whether buying makes sense at all? Our renting vs. buying breakdown examines the financial and lifestyle trade-offs in plain terms.

This article is for general informational purposes only and does not constitute personalized financial, mortgage, or legal advice. Loan eligibility, rates, and terms vary by lender, borrower profile, and market conditions. Consult a licensed mortgage professional or financial adviser before making borrowing decisions.