{"id":4147,"date":"2026-07-14T10:33:58","date_gmt":"2026-07-14T15:33:58","guid":{"rendered":"https:\/\/tomo.com\/blog\/?p=4147"},"modified":"2026-07-17T14:30:29","modified_gmt":"2026-07-17T19:30:29","slug":"va-vs-conventional-loans-which-is-better","status":"publish","type":"post","link":"https:\/\/tomo.com\/blog\/va-vs-conventional-loans-which-is-better\/","title":{"rendered":"VA vs conventional loans: which is better?"},"content":{"rendered":"\n

If you’re eligible for a VA loan<\/a>, the zero down payment and no PMI combination is hard to beat, but conventional loans<\/a> have advantages in specific situations. <\/p>\n\n\n\n

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There are some really important advantages to VA loans that might help you get into home ownership, but there are strings attached that could make it harder to win an offer.<\/a> Here is an intro to these two mortgage<\/a> types and their advantages and disadvantages.<\/p>\n\n\n\n

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Quick facts: VA vs Conventional Loans<\/strong>
VA loans are available only to eligible veterans, active-duty service members, and qualifying surviving spouses. Conventional loans are available to anyone who meets credit and income requirements. VA loans offer zero down payment, no PMI, and rates that typically run 0.25% to 0.50% below conventional at the same credit tier. VA loans charge a one-time funding fee (2.15% for first use with no down payment). Veterans with a service-connected disability rating of 10% or higher are exempt. Conventional loans require PMI if your down payment is below 20%, but PMI can be cancelled once you reach 20% equity. The VA funding fee cannot. At 20% down, conventional eliminates PMI and avoids the funding fee, making it potentially cheaper depending on the rate spread.<\/p>\n\n\n\n

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What are VA loans?<\/h3>\n\n\n\n

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A VA loan<\/a> is a mortgage loan backed by the U.S. Department of Veterans Affairs (VA).<\/a> Its primary purpose is to help veterans, active-duty service members, and eligible spouses<\/a> secure home financing with favorable terms. VA loans offer benefits like zero down payment, competitive interest rates, and no private mortgage insurance (PMI)<\/a>, making them a strong choice for eligible borrowers.<\/p>\n\n\n\n

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What are conventional loans?<\/h3>\n\n\n\n

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Conventional loans are backed by private mortgage lenders, with higher barriers to qualify such as credit score<\/a> and down payment.<\/a> Those that meet Fannie Mae and Freddie Mac guidelines are called conforming loans. Conventional loans have much fewer restrictions when it comes to the loan amount, type of property to be purchased, and intended use of the property. They are ideal for borrowers with good credit who can afford a larger down payment and want to avoid the restrictions of government-backed loans. They are far and wide the most frequently used loan type.\u00a0<\/p>\n\n\n\n

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We sometimes see sellers or their agents<\/a> may (wrongly) give preferential treatment to buyers with conventional loans over VA loans. This is often because VA loans can come with more restrictions that sellers might not want to deal with, or a slightly longer closing<\/a> timeline. It\u2019s important to talk to your lender about all your options so you can make the strongest possible offer<\/p>\n\n\n\n

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See today’s rates<\/a><\/div>\n<\/div>\n\n\n\n

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<\/td>VA Loan<\/td>Conventional Loan<\/td><\/tr>
Loan Term<\/td>15 and 30-year<\/td>15 and 30-year<\/td><\/tr>
Minimum Down Payment<\/td>0%<\/td>3%<\/td><\/tr>
Minimum Credit Score<\/td>Usually 580<\/td>620<\/td><\/tr>
Debt-to-income requirements<\/td>No hard cap; lenders typically use 41% as a guideline, with residual income as the primary qualifier.<\/td>43% to 50%, generally<\/td><\/tr>
Co-borrower allowed<\/td>Yes, even if they don\u2019t reside in the home<\/td>Yes, only if they reside in the home<\/td><\/tr>
Residency type<\/td>Primary residence only<\/td>Primary, secondary, or investment property<\/td><\/tr>
Mortgage fees<\/td>VA loans do not require any mortgage insurance. 
Instead, they have a one-time VA funding fee, typically 2.15% of the loan amount for first-time users (ranging from 0.5% to 3.3%).<\/td>		Private mortgage insurance (PMI), where costs range from 0.22% to 2.25% of the loan amount and are higher for larger loans if you put less than 20% down. You can cancel PMI once they’ve paid off 20% of the home’s value<\/td><\/tr>
Special conditions<\/td>VA loans have stricter appraisal<\/a> and inspection standards, <\/a>and often takes longer to close.\u00a0<\/td>Conforming loan limits, stricter DTI without compensating factors, and PMI until 20% equity.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

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Which is the better loan option? <\/h3>\n\n\n\n

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VA can win when:<\/strong> you have little or no cash for a down payment, you’re buying a primary residence, your credit score is in the 580\u2013680 range (where VA rates are particularly favorable), or you have a service-connected disability and are exempt from the funding fee.<\/p>\n\n\n\n

Conventional can win when:<\/strong> you can put 20% down and want to avoid the funding fee entirely, you’re buying a second home or investment property (VA doesn’t allow this), your credit score is above 720 and the rate gap with VA is narrow, or the property doesn’t meet VA appraisal standards.<\/p>\n\n\n\n

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However, the most accurate (though somewhat frustrating) answer is: it depends. Typically, the option to put 0% down with a VA loan for those who are eligible is hard to pass up, but buyers will want to consider the market and the properties they\u2019re targeting with their loan team and real estate agent.\u00a0<\/p>\n\n\n\n

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But, thankfully, your Loan Officer<\/a> will be able to talk through the pros and cons of each loan and their relative costs in your specific situation so that you get the best option. <\/p>\n\n\n\n

When you apply for a loan, you might not know which loan type you want, and that\u2019s OK.<\/p>\n\n\n\n

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Usually, the right answer is the one that will save you the most money. <\/p>\n\n\n\n

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If you are still weighing your options you can check out our FHA loan vs conventional loan breakdown<\/a> to discover more about your options.<\/p>\n\n\n\n

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Get started on my pre approval<\/a><\/div>\n<\/div>\n\n\n\n

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Claire Gallaudet<\/a><\/p>

Claire is a Mortgage Analyst at Tomo, where she explores the data and trends shaping the housing market. She is especially interested in how economic forces impact homebuyers. A Seattle native, she now lives in Austin, where she balances analysis and communications with teaching yoga and walks around the lake with her dog.<\/p><\/div><\/div>\n\n\n

If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

If you’re eligible for a VA loan, the zero down payment and no PMI combination is hard to beat, but conventional loans have advantages in specific situations. There are some really important advantages to VA loans that might help you get into home ownership, but there are strings attached that could make it harder to […]<\/p>\n","protected":false},"author":31,"featured_media":4187,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"fifu_image_url":"","fifu_image_alt":"","_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[13,285,38],"tags":[328,61,298,327],"class_list":["post-4147","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-home-buying-guide","category-home-buying-tips","category-mortgage-dictionary","tag-comparison","tag-conventional-loan","tag-homebuying","tag-va-loan"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t