Conventional, FHA, VA or USDA — how to tell which one is yours
Four programs, four different buyers. A plain comparison of who each one is built for and what it costs you monthly.
There is no "best" loan program. There is a program that fits your credit, your cash, your service history and the house you are buying. Here is how the four main options really differ.
| Program | Typical minimum down | Credit floor | Mortgage insurance |
|---|---|---|---|
| Conventional | 3% (first-time) / 5% | 620+ | PMI, removable at 20% equity |
| FHA | 3.5% | 580+ | MIP, usually for the life of the loan |
| VA | 0% | No set floor | None — one-time funding fee instead |
| USDA | 0% | 640+ typical | Guarantee fee, lower than FHA MIP |
General guidelines. Your file may qualify differently — this is a starting point, not an approval.
Conventional
The default choice if your credit is in decent shape. The real advantage is not the down payment — it is that private mortgage insurance comes off once you reach 20% equity, which FHA insurance generally does not. On a $300,000 loan that is often $120–$200 a month you stop paying a few years in.
FHA
Built for buyers whose credit is still recovering, or who carry more debt relative to income. FHA is more forgiving on both. The trade is mortgage insurance you keep paying, plus an upfront premium financed into the loan. For many buyers that is a completely reasonable price for getting into a house two years earlier — just go in knowing the cost.
VA
If you served, this is almost always the strongest loan on the board: no down payment, no monthly mortgage insurance, and competitive rates. The one-time funding fee can often be financed, and it is waived entirely for veterans receiving service-connected disability compensation. If you are eligible and someone steered you to a conventional loan without comparing the two, get a second opinion.
USDA
Zero down, but the property has to sit in a USDA-eligible area and your household income has to fall under a county limit. This matters enormously west of Charlotte — Cherryville, Vale, parts of Cleveland and Lincoln counties include a great deal of eligible ground. Buyers regularly assume they need a down payment for a house that qualifies for none.
Written by
Travis Nicolaysen
Loan Officer, Fairway Home Mortgage · NMLS #1782820
Questions about how this applies to your file? Call or text 704-728-4548.
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