Quick Comparison: All 4 Loan Types
The most important numbers at a glance. Full details on each loan type below.
| Feature | FHA Loan | VA Loan Best Rates | Conventional | USDA Loan |
|---|---|---|---|---|
| Min Down Payment | 3.5% (580+ credit) 10% (500-579) Low |
0% Zero Down! |
3-5% (first-time) 20% (no PMI) Flexible |
0% Zero Down! |
| Min Credit Score | 500 (10% down) 580 (3.5% down) |
No official minimum Most lenders: 620+ |
620 minimum 740+ for best rates |
No official minimum Most lenders: 640+ |
| Income Limits | None | None | None (standard) Limits apply for HomeReady/HomePossible |
115% of area median income |
| Mortgage Insurance | MIP: 1.75% upfront + 0.55-1.05% annually Life of loan if <10% down |
No PMI ever Funding fee: 1.25-3.3% No monthly PMI |
PMI if <20% down Cancels at 80% LTV Can be eliminated |
Guarantee fee: 1% upfront + 0.35% annually Lower than FHA |
| 2026 Loan Limit | $498,257 standard $1,149,825 high-cost |
No limit (for eligible veterans) | $766,550 standard $1,149,825 high-cost |
No fixed limit Based on income qualification |
| Property Location | Any location | Any location | Any location | Rural/suburban areas only Geographic limit |
| Occupancy | Primary residence only | Primary residence only | Primary, secondary, investment | Primary residence only |
| Who Qualifies | Anyone | Military/veterans only Service requirement |
Anyone (meets underwriting) | Income-qualified buyers in eligible areas |
| Best For | First-time buyers with lower credit | Military veterans & active duty | Borrowers with good credit and stable income | Rural buyers who meet income limits |
Each Loan Type — In Depth
Everything you need to know about qualification, costs, and when to use each loan.
FHA Loan
- Accepts credit scores down to 500
- 3.5% down with 580+ score
- Higher DTI allowance than conventional
- Gift funds allowed for down payment
- Non-occupant co-borrowers allowed
Pros
- MIP lasts for life of loan if <10% down
- Lower loan limits than conventional
- Primary residence only
- Property must meet FHA minimum standards
- Harder to compete in multiple-offer situations
Cons
VA Loan Best Value
- Zero down payment required
- No monthly mortgage insurance ever
- Consistently lowest average rates
- No loan limit (with full entitlement)
- More flexible qualification with residual income test
- Funding fee waived for service-connected disability
Pros
- Must have military service eligibility
- One-time funding fee (1.25-3.3% of loan)
- Primary residence only (no investment properties)
- Some sellers less familiar with VA process
Cons
Conventional Loan
- PMI can be cancelled (unlike FHA MIP)
- Higher loan limits than FHA
- Works for second homes and investment properties
- No funding fee or upfront MIP
- More flexibility on property types
Pros
- 620+ credit score minimum (740+ for best rates)
- Stricter debt-to-income requirements
- PMI required if <20% down (costly with lower credit)
- More documentation required for self-employed
Cons
USDA Loan
- Zero down payment required
- Lower mortgage insurance than FHA
- Competitive interest rates
- Allows 6% seller concessions
- Many "rural" eligible areas include small cities
Pros
- Geographic restrictions — must check eligibility map
- Income limits (115% of area median income)
- Primary residence only
- 30-year fixed only (no adjustable or 15-year)
- Processing takes longer (USDA approval required)
Cons
Mortgage Insurance: The Real Cost Comparison
PMI and MIP add real money to your monthly payment. Here's exactly what each loan type costs — and how to get rid of it.
FHA Mortgage Insurance Premium (MIP)
Upfront: 1.75% of loan amount, added to loan balance (on $290,000 loan = $5,075 added to loan).
Annual: 0.55-1.05% of loan balance per year, paid monthly (0.55% on 30-yr, >$150K, ≤90% LTV). At 0.55% on $290K loan = $133/month.
When it ends: If you put 10%+ down — after 11 years. If less than 10% down — MIP lasts for the ENTIRE 30-year term. Only way to eliminate it: refinance into a conventional loan once you have 20% equity.
Conventional Private Mortgage Insurance (PMI)
Cost: 0.5%-1.5% of loan amount annually, based on credit score and LTV. With 720+ credit and 10% down: ~0.5% ($125/month on $300K loan). With 640 credit and 5% down: up to 1.5% ($375/month).
When it ends: Automatically at 78% LTV (by payments). You can request cancellation at 80% LTV. If home appreciates, you may get a new appraisal and reach 80% sooner. PMI completely gone — no refinancing required.
VA Funding Fee (One-Time)
Amount: 1.25%-3.3% of loan amount, paid once at closing (or financed into loan).
First-time VA use, 0% down: 2.15%
Subsequent use, 0% down: 3.3%
With 5%+ down: 1.5%; with 10%+ down: 1.25%
Exempt: Veterans with 10%+ service-connected disability rating pay no funding fee.
There is no monthly mortgage insurance — ever. The one-time fee pays off over the life of the loan compared to PMI costs.
USDA Guarantee Fee
Upfront: 1% of loan amount (on $290K loan = $2,900 added to loan — lower than FHA's 1.75%).
Annual fee: 0.35% of remaining balance annually, paid monthly (~$84/month on $290K loan — significantly less than FHA).
When it ends: The annual fee continues for the life of the loan (like FHA MIP). However, due to the lower annual rate, total insurance costs over 30 years are substantially less than FHA.
Which Loan is Right for You?
Answer these questions in order to find your best loan type.
Are you a veteran, active duty service member, or qualifying surviving spouse?
If yes, a VA loan should be your first choice in almost every case — zero down, no PMI, competitive rates, and the funding fee is often worth it compared to years of PMI payments.
Is the home in a rural or suburban area, and is your household income below 115% of area median income?
USDA-eligible areas cover far more of the country than people realize — including many suburban communities within 50 miles of major cities. Check the USDA eligibility map. If you qualify, zero down and lower mortgage insurance than FHA makes it very attractive.
Is your credit score below 620?
Below 620, conventional loans aren't available. FHA accepts 580+ (3.5% down) or 500-579 (10% down). If your score is below 580, FHA is your most realistic path — or spend 6-12 months raising your score first to access better conventional terms.
Do you have 20% or more for a down payment?
With 20% down on a conventional loan, you eliminate PMI entirely and get the best conventional rates. This is often the most financially optimal choice for buyers who can afford it and plan to stay 7+ years.
Is your credit score 700 or higher, and do you plan to own the home long-term?
With 700+ credit and a plan to stay, conventional with PMI may beat FHA. Conventional PMI is cancellable (typically within 5-7 years as you build equity); FHA MIP is permanent. Calculate: what's the monthly PMI difference, and how long to break even? For most 700+ borrowers putting down 5-10%, conventional beats FHA by year 3-5.