VA vs. FHA vs. Conventional: Compare Costs, Cash, and Insurance

This matrix describes broad differences, not approval or pricing.

For an apples-to-apples comparison, choose a down payment that is feasible under all three programs—such as 3.5% if each offered product permits it—and match price, term, structure, and lock timing. Then compare each resulting funded balance; program-specific financed fees can make balances differ.

Separately, compare minimum-cash scenarios: VA may permit 0% down with sufficient entitlement, FHA generally requires at least 3.5%, and certain conventional programs permit 3% for eligible borrowers. Those are not equal-down-payment scenarios and should not be labeled that way. Include costs, prepaids, points, credits, escrow, and any appraisal gap.

VA has no monthly mortgage insurance, but a funding fee may apply. FHA generally includes upfront and annual MIP; annual MIP duration depends on case date, original LTV, and term. Conventional PMI amount and cancellation depend on the product and law.

For many covered conventional principal-residence loans, a borrower may request PMI cancellation at scheduled 80% with conditions, and automatic termination generally occurs at scheduled 78% if current. Use actual disclosures rather than one assumed duration.

Compare rate, APR, points, lender credits, funded balance, principal and interest, monthly insurance, cash to close, and remaining balance. Keep tax and homeowners-insurance estimates consistent where possible.

On Loan Estimate page 3, subtract principal paid after five years from total paid after five years to estimate interest and fees. Also calculate through the expected exit date because upfront fees and insurance duration affect short and long holds differently.

VA's 4% seller-concession limit applies to concessions measured against reasonable value; ordinary seller-paid closing costs are separate. FHA and conventional limits differ. Have proposed credits classified before comparing revised estimates.

Eligibility, exemption status, property, credit, reserves, co-borrowers, and occupancy can change the available choice. No score, down payment, or timeline makes one program universally best.

• Confirm which programs and down-payment scenarios are actually eligible.
• Request same-day estimates with matched assumptions for the apples-to-apples run.
• Run separate minimum-cash scenarios without calling them equal-down comparisons.
• Identify every upfront fee and monthly insurance charge and its expected duration.
• Compare funded balances, cash retained, five-year cost, expected-hold cost, and payment stability.

• Use the detailed VA-versus-conventional worksheet