Conventional, FHA, VA, and USDA Loans Compared
The right loan program depends on your credit, your cash, your service history, and where the house is. Here is how the four main options differ.
Fact-checked and reviewed for financial accuracy by Priya Kannan, CFP®. Read our content review process.
Most buyers qualify for more than one program, and the cheapest one over your actual holding period is not always the one with the lowest down payment.
| Conventional | FHA | VA | USDA | |
|---|---|---|---|---|
| Minimum down payment | 3% | 3.5% | 0% | 0% |
| Typical minimum credit score | 620 | 580 (500 with 10% down) | No set minimum; lenders often 620 | 640 typical |
| Mortgage insurance | PMI until 20% equity | MIP, often for the life of the loan | None — one-time funding fee | Annual guarantee fee |
| Property restrictions | Few | Must meet HUD standards | Must meet VA standards | Eligible rural areas only |
| Who it suits | Strong credit, some savings | Lower credit or low down payment | Eligible veterans and service members | Moderate income, eligible areas |
Conventional
Not government-insured, and priced heavily on credit score. Above roughly 740 you get the best pricing; below 680 the rate adjustments become significant. The advantage is that private mortgage insurance ends — automatically at 78 percent loan-to-value, or on request at 80 percent.
FHA
Insured by the Federal Housing Administration and designed for buyers with thinner credit or less cash. The trade-off is mortgage insurance: an upfront premium plus an annual premium that, on most loans originated with less than 10 percent down, lasts for the life of the loan. Many FHA borrowers refinance into a conventional loan once they reach 20 percent equity.
VA
For eligible veterans, active-duty service members, and some surviving spouses. No down payment, no monthly mortgage insurance, and generally competitive rates — the strongest program available to anyone who qualifies. A one-time funding fee applies and is waived for borrowers with a service-connected disability rating.
USDA
Zero down for properties in designated rural and some suburban areas, subject to household income limits. The eligibility map is broader than most buyers expect and is worth checking directly rather than assuming.
Frequently asked questions
Can I switch loan programs after preapproval?
Yes, up to a point in the process. Tell your loan officer early, because changing programs can require a new appraisal and restart parts of underwriting.
Is FHA mortgage insurance permanent?
On loans with less than 10 percent down, the annual premium generally lasts the life of the loan. With 10 percent or more down, it currently drops after 11 years.
Do VA loans have limits?
For borrowers with full entitlement, there is no loan limit, though lenders set their own maximums.
Editorial note. This article is educational and is not financial, tax, or legal advice. Loan terms, rates, insurance costs, and tax rules vary by lender, state, and individual circumstance. Figures shown are illustrative. Confirm details with a licensed lender, tax professional, or attorney before making a decision.
