Conventional vs. FHA vs. VA vs. USDA
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.
Side by side
| Program | Min. down | Mortgage insurance | Best fit |
|---|---|---|---|
| Conventional | 3% | PMI — removable at 20% equity | Strong credit |
| FHA | 3.5% | MIP — often life-of-loan under 10% down | Thinner files |
| VA | 0% | None (one-time funding fee) | Eligible veterans |
| USDA | 0% | Guarantee fee (upfront + annual) | Rural, income-eligible |
Common questions
What's the minimum down payment for each loan type?
Conventional loans start as low as 3%, FHA at 3.5% (with a qualifying score), and VA and USDA at 0% for borrowers who qualify.
Is FHA or conventional better with less than 20% down?
Conventional PMI is removable once you reach 20% equity, while FHA's mortgage insurance usually lasts the life of the loan. Strong-credit buyers often prefer conventional even below 20% down for that reason.
Do VA loans really have no down payment or monthly mortgage insurance?
Yes, for eligible veterans, service members and surviving spouses: 0% down and no monthly MI. There is a one-time funding fee (about 2.15% on a first-use, no-down loan, waived for some disabled veterans) that can be rolled into the loan.
What makes a USDA loan different?
It offers 0% down for moderate-income buyers in eligible rural and many suburban areas, with income and location limits plus an upfront and a small annual guarantee fee.
By L.W. Martin, Founder — 20 years in the mortgage business, including 15 running his own brokerage. About → · Updated September 2026.