VA Loan vs Conventional Loan
Last updated July 2026
VA Loan
The mortgage benefit you earned through service
Advantages
- Zero down payment required on any loan amount
- No private mortgage insurance (PMI) ever
- Typically lower interest rates than conventional loans
- More lenient credit score requirements (often 580+)
- VA limits closing costs that lenders can charge
Drawbacks
- VA funding fee adds 1.25-3.3% to the loan (waived for disabled vets)
- Only available to eligible veterans, active duty, and surviving spouses
- Property must meet VA appraisal standards which can be stricter
- Sellers sometimes prefer conventional offers due to perceived complexity
Conventional Loan
The standard mortgage for qualified buyers
Advantages
- Available to anyone who qualifies, no service requirement
- PMI drops off automatically at 80% loan-to-value
- Can be used for investment properties and second homes
- No funding fee, potentially lower upfront costs with 20% down
- Sellers often view conventional offers more favorably
Drawbacks
- Requires 3-20% down payment depending on program
- PMI required with less than 20% down, adding $50-$200/mo
- Stricter credit requirements (typically 620-700+ for best rates)
- Interest rates are usually slightly higher than VA loans
VA loans are one of the strongest benefits available to eligible veterans and service members, offering zero down payment and no PMI. Conventional loans reward buyers with strong credit and healthy savings differently. Which wins depends on your down payment, credit score, and how long you'll stay in the home.
Feature Comparison
| Feature | VA Loan | Conventional Loan |
|---|---|---|
| Down Payment | 0% required | 3-20% required |
| Private Mortgage Insurance | None, ever | Required below 80% LTV; drops off automatically |
| Interest Rates | Typically 0.25-0.5% lower than conventional | Market rate; varies by credit score |
| Credit Score Requirement | 580+ (lender may require 620+) | 620+ minimum; 740+ for best rates |
| Funding Fee | 1.25-3.3% (waived for disabled vets) | None |
| Closing Costs | VA caps certain lender fees | 2-5% of loan amount |
| Loan Limits | No limit for full-entitlement borrowers | $766,550 conforming (2026); higher in HCOL areas |
| Allowed Property Types | Primary residence only | Primary, second home, or investment property |
VA Loan Wins
VA loans are the clear winner for eligible borrowers, zero down, no PMI, and lower rates make them one of the best mortgage products available.
If you're eligible for a VA loan, it's almost always the better financial choice. The funding fee is the only real cost disadvantage, and it's waived entirely for veterans with service-connected disabilities. A conventional loan only wins if you're putting 20%+ down (eliminating PMI), have exceptional credit that gets you rock-bottom conventional rates, or need a mortgage for an investment property or second home, which VA loans don't cover.
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