Key Takeaways
- You can get a VA loan with zero down payment and you won’t pay for private mortgage insurance (PMI), which is almost always required on conventional loans with less than 20% down.
- Conventional loans will demand a down payment, typically from 3% to 20%. If you put down less than 20%, you’re also paying for PMI every month.
- The VA loan has a funding fee, which can be rolled into the loan, but this one-time cost is usually way cheaper than paying PMI for years on a conventional loan.
- Credit score rules for VA loans are looser. Lenders often work with scores around 620, while conventional loans usually require a 680 score or better.
- Getting your Certificate of Eligibility (COE) is your first real step, it tells you exactly what your VA loan benefit is and how much you can borrow.
If you’re a first-time homebuyer, especially a vet or active-duty, picking a mortgage is a huge decision. The choice between a VA loan comparison and a standard conventional loan is a big one for anyone who’s served because it dictates your upfront cash needed and how your payments will look for years. The process involves looking at the specific perks and hoops of each loan type so you can buy your first home without second-guessing the financing.
1. Obtain Your Certificate of Eligibility (COE) for a VA Loan
Before you even talk to a realtor, your first move for a VA loan is getting your Certificate of Eligibility (COE). A lender can’t even start your application without it. This paper is the official proof you meet the service requirements. It’s the Department of Veterans Affairs (VA) guarantee on your loan that convinces lenders to give you great terms, like no down payment. You can get the COE yourself on the VA’s eBenefits portal, ask your lender to pull it for you (they do this all the time), or go old-school and mail in VA Form 26-1880. For instance, if you served at least 90 consecutive days of active service during wartime, or 181 days during peacetime, you’ll almost certainly qualify.
Pro Tip:
Have your discharge papers (DD Form 214) or a current Statement of Service ready to go. Having those documents in hand makes getting your COE way faster because they contain all the info the VA needs to verify your service.
Common Mistake:
Just assuming you don’t qualify. A lot of vets and active-duty members are eligible based on their specific service window and don’t even know it. You have nothing to lose by applying for the COE to get a final answer.
2. Understand Down Payment Requirements
The biggest headline for VA loans is buying a home with no down payment. For a lot of first-time buyers, that’s everything. Think about it: on a $350,000 house, a conventional loan would demand you show up with at least $10,500 (3%) and maybe as much as $70,000 (20%) just to get in the door. With a VA loan, you can often finance 100% of the home’s value, as long as the house appraises for what you’re paying. You still need cash for other things, but the huge down payment hurdle is gone.
Pro Tip:
Just because you can get a VA loan with no down payment doesn’t mean you have to. If you can afford to put some money down, even a little bit, it will lower your monthly payment and reduce the total interest you pay over the 30-year term.
Common Mistake:
Confusing “no down payment” with “no cash to close.” You still have closing costs. These can include appraisal fees, title insurance, and the VA funding fee, so you’ll need some cash on hand.
3. Evaluate Private Mortgage Insurance (PMI) vs. VA Funding Fee
With a conventional loan, putting down less than 20% of the home’s price means you’re stuck paying for Private Mortgage Insurance (PMI) every month. This insurance doesn’t protect you. It protects the bank in case you default. And it adds up. Research from the Mortgage Bankers Association shows PMI can cost anywhere from 0.3% to 1.5% of your loan amount every year, tacked onto your payment. VA loans don’t have PMI. Period. Instead, most borrowers pay a one-time VA funding fee that helps support the loan program for future vets and lowers the lender’s risk. The fee changes based on your service and down payment, but for a first-time user with zero down in 2026, it’s typically 2.15% of the loan amount. The best part? You can usually just roll this fee into your total loan amount instead of paying it at closing. Veterans receiving VA disability compensation are also exempt from this fee.
Pro Tip:
Do the math. Calculate the total cost of PMI over, say, seven years and compare it to the one-time VA funding fee. You’ll almost always find the funding fee, even when financed, is the cheaper option.
Veteran homeowners. Want to lower your monthly payments?
See if a VA Cash Out Loan or VA Home Loan can put cash in your pocket or help you buy with $0 down. A specialist will review your options, free.
- VA Cash Out Loan: use up to 100% of your home’s equity
- VA Home Loan: buy a home with $0 down payment
- No cost, no obligation eligibility check
You’re all set.
A VA loan specialist will reach out shortly to review your Home Loan and Cash Out options.
Common Mistake:
Forgetting the VA funding fee can be financed. Most people don’t pay this as a separate out-of-pocket expense at the closing table unless they choose to.
4. Compare Credit Score Requirements
Conventional lenders are picky about credit. You’ll generally need a FICO score of 680 or higher to get a good rate, and a stronger history gets you better terms. VA loans are much more flexible. While the VA itself doesn’t have a score requirement, the lenders who actually issue the loans do, and it’s not unusual to see approvals for borrowers with credit scores down to 620. Sometimes a lender will even go lower if you have a solid income and low debt. For a vet with a steady job but maybe a few dings on their credit report, this makes a huge difference.
Pro Tip:
Pull your own credit report from all three bureaus, Experian, Equifax, and TransUnion, before you apply. You can get them for free once a year at AnnualCreditReport.com. Fixing even one or two mistakes can sometimes bump your score 10-50 points, which can make a real difference in your interest rate.
Common Mistake:
Giving up because of a low score. Don’t assume you’re out of the running. Plenty of lenders focus specifically on VA loans and understand the financial profiles of veterans, so they have more relaxed guidelines.
5. Consider Loan Limits and Property Types
If you have your full VA entitlement, there are no official VA loan limits in most of the country. You can borrow whatever a lender qualifies you for without a down payment. Things change if you have reduced entitlement (maybe you have another VA loan or defaulted on one years ago). In that case, you’ll be subject to county-level loan limits that are usually the same as the conforming limits set by the Federal Housing Finance Agency (FHFA) for conventional loans. For example, there’s a specific 2026 limit for a house in Fulton County, Georgia, that would apply to both loan types. Both VA and conventional loans work for single-family homes, condos, or even multi-unit buildings if you live in one of the units. But the VA is strict about the property’s condition. It has to pass an appraisal for Minimum Property Requirements (MPRs) to prove it’s safe and sound, meaning that charming fixer-upper might need some repairs before your VA loan gets the green light.
Pro Tip:
If you’re looking at an older home or one that might need some work, bring it up with your lender and a VA-savvy real estate agent right away. They’ll have a good sense of whether the property will meet MPRs or what you’ll need the seller to fix before closing.
Common Mistake:
Not knowing your entitlement status. If you’ve used a VA loan before and haven’t sold that property, your remaining entitlement could cap how much you can borrow with no money down on the next one.
| Feature | VA Loan | Conventional Mortgage (with <20% down) | Conventional Mortgage (with ≥20% down) |
|---|---|---|---|
| Down Payment Required | ✓ No down payment (often 0%) | ✓ 3% to 20% down payment | ✓ 20% or more down payment |
| Private Mortgage Insurance (PMI) | ✗ No PMI | ✓ PMI required (0.3% to 1.5% annually) | ✗ No PMI |
| VA Funding Fee | ✓ Yes (e.g., 2.15% for first-time, no down) | ✗ No | ✗ No |
| Credit Score Flexibility | ✓ More flexible (some lenders 620+) | ✗ Less flexible (generally 680 or higher) | ✗ Less flexible (generally 680 or higher) |
| Certificate of Eligibility (COE) | ✓ Required for eligibility | ✗ Not applicable | ✗ Not applicable |
| Financing Upfront Costs | ✓ VA funding fee can be financed | ✗ PMI cannot be financed | ✗ Not applicable |
6. Compare Interest Rates and Closing Costs
You’ll often find that VA loans have lower interest rates compared to conventional mortgages. Because the loan is backed by the VA, lenders see it as less risky, and they pass that on to you as a better rate. Over 30 years, that small difference can save you tens of thousands of dollars. Both loan types have closing costs like appraisal and title fees, but the VA actually puts a cap on what lenders can charge veterans in certain “non-allowable” costs. It’s also very common in a VA deal to negotiate for the seller to pay some or all of your closing costs, which is a huge plus. Conventional loans give lenders more room to set their own fees, although these are always negotiable.
Pro Tip:
Get a loan estimate (LE) from at least two or three lenders for both loan types. Don’t just look at the rate. Compare the APR and the breakdown of all the closing costs to see the true cost of each loan.
Common Mistake:
Getting fixated on the interest rate alone. The closing costs and other fees can add thousands to your loan, so you have to look at the whole picture to know which deal is actually better.
7. Consider Refinancing Options
Both loan types can be refinanced, but the VA’s version is way easier. It’s called the Interest Rate Reduction Refinance Loan (IRRRL), or a “VA simplify.” It lets you refinance an existing VA loan to get a lower rate with almost no paperwork, often no new appraisal, no income verification, and no credit pull. It’s an incredibly simple way for vets to drop their monthly payment or get out of an adjustable-rate loan. A conventional refi is a much heavier lift, usually requiring a full new application, appraisal, and credit check, just like your original loan.
Pro Tip:
If you have a VA loan and you see interest rates drop, look into the IRRRL right away. It’s one of the most straightforward and effective tools for lowering your house payment.
Common Mistake:
Forgetting to check on a refinance after a couple of years. The market is always moving. A refi might not make sense today, but it could save you a ton of money a year from now. The choice between a VA loan and a conventional one comes down to running the numbers for your own situation. You have to look at your savings, your service history, and where you want to be in five years. Getting a handle on how each of these loans works is the only way to pick the one that actually gets you into a home you can afford.
What is the primary advantage of a VA loan over a conventional mortgage?
The biggest advantages are the 0% down payment option and no monthly private mortgage insurance (PMI). This saves you a ton of cash both at closing and every month afterward compared to most conventional loans.
Can I get a VA loan if I have already used my VA loan benefit?
Yes, you can absolutely use it more than once. Your “remaining entitlement” just affects how much you can borrow with no money down on the next home. You might have to make a small down payment if you already have a VA loan out.
Are VA loan interest rates always lower than conventional rates?
They are often lower because the loan is guaranteed, but it’s not a rule. Rates change daily with the market, so you should always get quotes for both VA and conventional loans from a few different lenders to see what’s best on the day you apply.
What are Minimum Property Requirements (MPRs) for a VA loan?
MPRs are the VA’s basic living standards. An appraiser checks to make sure the house is safe, sanitary, and structurally sound, things like a good roof, working utilities, and no major safety hazards. The property has to meet these standards to be approved for the loan.
Is the VA funding fee always required for a VA loan?
No, not always. While most borrowers pay it, there’s a major exception: veterans who receive VA disability compensation are exempt. The fee is also waived for Purple Heart recipients and certain surviving spouses.
