FHA vs Conventional vs VA vs USDA: Which Loan is Right for You
A clear comparison of the four main mortgage loan types. Find out which one you qualify for and which saves you the most money.
4½ years of service including two tours in Iraq and one in Afghanistan, and a service-connected disabled vet. I've bought two homes with the VA loan: my first in Tampa Bay, Florida, and the one I live in now near Atlanta, Georgia.
Conventional, FHA, VA, and USDA are the four main ways to finance a home in the United States. The difference between them comes down to a few things: how much you must put down, the credit score you need, and — the big one — how you pay for mortgage insurance. This guide compares all four side by side so you can see which fits your situation, then estimate a real monthly payment with the calculator below. (All figures reflect 2026 program rules.)
How the four loan types compare
Scroll the table sideways on a phone to see every program. The clearest differences show up in the mortgage insurance and upfront fee rows.
| Feature | Conventional | FHA | VA | USDA |
|---|---|---|---|---|
| Minimum down payment | As low as 3% (often 5%) | 3.5% with a 580+ score (10% if 500–579) | 0% | 0% |
| Minimum credit score | Typically 620 | 580 for 3.5% down; 500–579 with 10% down | No VA minimum; lenders often want 580–620 | No USDA minimum; lenders often want 640 |
| Mortgage insurance | PMI required if you put down less than 20%; cancellable once you reach ~20% equity | Upfront MIP of 1.75% plus an annual MIP of about 0.45%–1.05% (commonly ~0.55%). Lasts the life of the loan unless you put 10%+ down, then it can drop after 11 years | No monthly mortgage insurance | Upfront guarantee fee of 1% plus an annual fee of 0.35%, for the life of the loan |
| One-time upfront fee | None (beyond PMI) | 1.75% upfront MIP (can be rolled into the loan) | Funding fee, typically 2.15% for first use with no down payment (range ~1.25%–3.3%); $0 for veterans with a service-connected disability | 1% guarantee fee (can be rolled into the loan) |
| Income limits | None for standard loans | None | None | Yes — generally up to 115% of the area median income |
| Location restrictions | None | None | None | Home must be in a USDA-eligible rural or suburban area |
| Loan limits (2026, one-unit) | Conforming baseline $832,750 (up to $1,249,125 in high-cost areas) | Floor $541,287; ceiling $1,249,125 (varies by county) | No limit with full entitlement | No set limit; capped by income and repayment ability |
| Occupancy | Primary, second home, or investment | Primary residence | Primary residence | Primary residence |
| Best for | Buyers with 620+ credit who can avoid lifelong insurance and cancel PMI later | First-time buyers, lower credit scores, or higher debt-to-income ratios | Eligible veterans, active-duty service members, and qualifying surviving spouses | Low-to-moderate-income buyers in eligible rural and suburban areas |
Mortgage Calculator
Full payment breakdown with amortization, extra payments, and loan comparison.
Home Purchase Details
$80,000 (20.0%) · Loan: $320,000 · ✅ No PMI
Today's 30yr avg: 6.27% · 15yr avg: 5.62% · 5/1 ARM: 6.42%
Loan start date
Monthly costs
$400/mo
$125/mo
Extra monthly payment
Even $100/mo extra can save tens of thousands and cut years off your loan.
Total monthly payment
$2,499.46
6.3% interest · 30 years · starts July 2026
Principal & interest
$1,974.46
Taxes & insurance
$525.00
Loan summary
Payment options
Monthly payment
$1,974.46
Bi-weekly payment
$987.23
Annual total
$23,694
Payoff date
Jun 2056
💡 Bi-weekly payments = 26 half-payments/year (13 full payments). This pays off a 30yr loan ~4 years early.
Loan type guide
Most popular. Lowest monthly payment. Most interest paid overall.
Roughly half the total interest. Higher payment but faster equity.
Fixed 5 years then adjusts. Good if you plan to move or refinance.
Lowest payment but non-qualified mortgage. Higher rates apply.
The biggest difference is mortgage insurance
Down payment usually gets the attention, but mortgage insurance is what quietly drives long-term cost. With a conventional loan, PMI goes away once you build about 20% equity. FHA insurance, by contrast, sticks around for the life of the loan unless you put at least 10% down. VA loans skip monthly insurance entirely in exchange for a one-time funding fee, which is why they're often the cheapest option over time for those who qualify. USDA sits in between: low fees that never fully disappear. So the “cheapest” loan depends less on the down payment and more on how long you'll keep the loan and how fast you'll build equity.
Which loan is right for you?
If you have strong credit and can eventually reach 20% equity, a conventional loan avoids permanent insurance. If your credit is in the 500s–low 600s or your down payment is small, FHA is the most forgiving. If you've served in the military, a VA loan is almost always the best deal — no down payment and no monthly insurance. And if you're buying in a rural or suburban area and your income is moderate, USDA offers a zero-down option with the lowest ongoing fees. Many buyers qualify for more than one, so it's worth comparing the total cost, not just the monthly payment.
Frequently asked questions
Which loan has the lowest down payment?
VA and USDA loans both allow 0% down for eligible borrowers. FHA requires 3.5% down with a 580+ credit score, and conventional loans start as low as 3%.
Is an FHA or conventional loan cheaper?
It depends on how long you keep the loan. FHA is easier to qualify for, but its mortgage insurance can last the life of the loan. Conventional PMI cancels once you reach about 20% equity, so conventional is often cheaper over time for buyers with good credit.
What credit score do I need?
Roughly: 620 for conventional, 580 for FHA at 3.5% down (500 with 10% down), and no official minimum for VA or USDA — though lenders typically look for 580–640.
Can I switch from an FHA loan to a conventional loan later?
Yes. Many buyers start with an FHA loan and refinance into a conventional loan once they have 20% equity, which removes the FHA mortgage insurance.
What's the difference between PMI, MIP, the VA funding fee, and the USDA guarantee fee?
They all protect the lender, but they work differently. PMI (conventional) is cancellable. MIP (FHA) has an upfront and annual portion and often lasts the life of the loan. The VA funding fee is a one-time charge with no monthly insurance. The USDA guarantee fee has a small upfront and annual portion. The names differ; the purpose is the same.
This guide is for general informational purposes only and is not financial or lending advice. Loan terms, fees, and limits vary by lender, county, and your individual situation. Confirm current details with a licensed lender before making decisions.
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