VA Loan vs Conventional vs FHA: Which Should Military Buyers Use?
If you're eligible, the VA loan usually wins — but not always. Here's an honest comparison of the three main mortgage types for service members.
| VA Loan | Conventional | FHA | |
|---|---|---|---|
| Down payment | $0 | 3–20% | 3.5% |
| Mortgage insurance | None | PMI under 20% down | MIP (often for life of loan) |
| Upfront fee | Funding fee (financed, often waived) | None | 1.75% upfront MIP |
| Credit flexibility | High (residual-income test) | Strictest | High |
| Who can use it | Eligible service members/vets | Anyone | Anyone |
When the VA loan wins (most of the time)
No down payment and no monthly mortgage insurance is hard to beat — the funding fee is one-time (and $0 if you have a disability rating). Over a few years, skipping PMI alone saves thousands.
When conventional or FHA might fit
- Conventional: if you have 20% down (no PMI, no funding fee) or are buying a non-primary residence the VA loan doesn't allow.
- FHA: rarely better than VA for those eligible, but an option if you've exhausted VA entitlement.
- Multiple properties: you can pair a VA loan on your home with conventional financing on a rental.
Bottom line: if you qualify for VA and it's your primary home, start there. Lenders count your tax-free BAH as income on all three.
Check the BAH lenders will use — look it up by ZIP.
Calculate my pay →Frequently asked questions
Is a VA loan better than conventional or FHA?
For eligible buyers on a primary home, usually yes — $0 down and no monthly mortgage insurance beat conventional (PMI under 20% down) and FHA (lifetime MIP). The VA funding fee is one-time and often waived.
When should military use a conventional loan?
If you have 20% down (avoiding PMI and the funding fee) or are buying a property the VA loan doesn't allow, such as a pure investment property.
Do all three count BAH as income?
Yes — lenders count tax-free BAH and BAS as qualifying income on VA, conventional, and FHA loans.