Conventional vs. FHA vs. VA vs. USDA

Last updated August 24, 2026

Conventional, FHA, VA, USDA — the loan type you choose changes your down payment, your mortgage insurance, and sometimes whether you're approved at all. Here's how they actually differ, in plain terms.

Conventional

The default for well-qualified buyers. It conforms to Fannie Mae / Freddie Mac rules, needs as little as 3% down, and rewards a strong credit file with the best pricing. Below 20% down you pay PMI — but it's removable once you reach 20% equity, which is its big advantage over FHA.

FHA

Government-insured and built for thinner files: 3.5% down with a qualifying score, and more forgiving on credit and DTI than conventional. The catch is the mortgage insurance premium (MIP) — on most FHA loans with less than 10% down it lasts the life of the loan, so many borrowers use FHA to get in, then refinance into a conventional loan once they have equity.

VA

For eligible veterans, service members, and surviving spouses, the VA loan is often the best deal available: 0% down and no monthly mortgage insurance. There is a one-time funding fee (which can be rolled into the loan, and is waived for some disabled veterans). If you qualify, it's almost always worth pricing.

USDA

The USDA loan offers 0% down for moderate-income buyers in eligible rural and many suburban areas. It comes with income and location limits and its own guarantee fees (an upfront fee plus a small annual one). If your area and income qualify, it's a genuine no-down-payment path outside the VA.

There's no universal "best" loan — only the one that fits your file and plans. Strong credit with 20% down leans conventional; a thin file leans FHA (then refinance); a veteran should almost always price the VA option; rural and income-eligible buyers should check USDA. Whatever the program, shop the rate against our neutral Index.

By L.W. Martin, Founder — 20 years in the mortgage business, including 15 running his own brokerage. About → · Updated August 2026.