FHA vs Conventional vs VA Loans - Guide (2026)

Direct Answer

For a $300,000 home, a VA (U.S. Department of Veterans Affairs) loan is the most affordable, requiring $0 down and $0 monthly insurance. A conventional loan at 6.5% with 5% down costs about $2,137/month (including PMI), while an FHA (Federal Housing Administration) loan at 6.25% with 3.5% down costs about $2,168/month (including MIP). VA loans save the most upfront cash and monthly cost; Conventional loans save the most over 30 years if you can reach 20% equity; FHA loans are the most accessible for borrowers with credit scores below 620. Use the Mortgage Calculator to model your specific loan type.

Last verified on: June 28, 2026

Editorial note: This comparison uses mid-2026 rate data for FHA, Conventional, and VA 30-year fixed loans. Actual rates and insurance premiums vary by lender, credit score, LTV (loan-to-value ratio), and loan amount. This guide does not cover jumbo loans or portfolio products.

Research method: Daily Calcs reviewed HUD FHA guidelines, VA Loan Guaranty Handbook, Fannie Mae/Freddie Mac conventional standards, and current rate spreads from Freddie Mac PMMS (Primary Mortgage Market Survey, late May 2026). All sources re-verified June 28, 2026.

Side-by-Side Loan Comparison

Feature	Conventional	FHA (Federal Housing Administration)	VA (U.S. Department of Veterans Affairs)
Min Down Payment	3%	3.5%	0%
Min Credit Score	620	580	Varies (usually 580-620)
Monthly Insurance	PMI (Cancelable)	MIP (Lifelong with under 10% down)	None
Upfront Fees	None	1.75% Upfront MIP	Funding Fee (can be waived)
Best For…	High credit, 5%+ down	Low credit, limited cash	Veterans and active military

PMI (private mortgage insurance) and MIP (mortgage insurance premium) protect the lender, not the borrower. LTV (loan-to-value ratio) determines your insurance rate.

Total Cost Comparison: $300,000 Home

Scenario: 30-year fixed, typical mid-2026 rates

Loan Type	Down Payment	Monthly P&I + Insurance	Total cost over 30 years	Upfront Cash Needed
VA Loan	$0	$1,896	$682,560	$0 (plus closing costs)
Conventional	$15,000 (5%)	$2,137	$647,640	$15,000
FHA Loan	$10,500 (3.5%)	$2,168	$680,760	$15,563 (incl. MIP)

Conventional loan total cost is lowest over 30 years because PMI drops off at 80% LTV. FHA loan totals are higher due to lifelong MIP and 0% down principal.

When to Choose Each Loan Type

1. Choose a VA Loan if you are eligible

If you are a veteran or active-duty service member, the VA loan is almost always the superior choice. The 0% down payment and absence of monthly mortgage insurance create a massive monthly and upfront advantage.

2. Choose a Conventional Loan if you have 660+ credit

Conventional loans are best for those with a healthy credit score and at least 3%-5% down. The primary advantage is the ability to cancel PMI once you reach 20% equity. This makes conventional loans cheaper than FHA loans over the long term.

3. Choose an FHA Loan if you have a credit score under 620

FHA loans are designed for accessibility. If your FICO (Fair Isaac Corporation) score is between 580 and 620, or if you have a limited down payment, FHA is often the only viable path to homeownership. While the MIP is expensive, it allows you to enter the market sooner.

The “Insurance Trap”: PMI vs. MIP vs. Funding Fee

Understanding the “insurance” part of your payment is key to long-term savings:

PMI (private mortgage insurance): Used in conventional loans. It can be canceled once your LTV (loan-to-value) reaches 80%.
MIP (mortgage insurance premium): Used in FHA loans. If you put down less than 10%, MIP stays for the life of the loan. The only way to remove it is to refinance into a conventional loan.
VA Funding Fee: A one-time fee paid to the VA to guarantee the loan. It can be rolled into the loan balance, meaning you don’t pay it upfront, but you pay interest on it.

Calculator Methodology

The comparison uses:

home price: $300,000
Conventional: 6.5% rate, 5% down, 0.65% PMI
FHA: 6.25% rate, 3.5% down, 0.55% MIP + 1.75% upfront MIP
VA: 6.5% rate, 0% down, no monthly insurance
All scenarios assume a 30-year fixed term and $100/month homeowners insurance.

Standard amortization formula:

Payment = P * r(1 + r)^n / ((1 + r)^n - 1)

Assumptions and limitations: Rates are mid-2026 planning estimates — request Loan Estimates for your file. MIP/PMI durations depend on down payment and loan-to-value (LTV). VA funding fee varies by use and disability status. Jumbo and non-QM products excluded.

Loan Type Selection Checklist

Confirm VA eligibility and Certificate of Eligibility before comparing costs
If credit is below 620, model FHA; if 660+ with 5% down, model conventional
Compare monthly PITI (Principal, Interest, Taxes, and Insurance), not just down payment or rate
Factor FHA upfront MIP (1.75%) into cash-to-close
Ask when conventional PMI cancels (80% LTV)
Run all three in the Mortgage Calculator with your quote

Official and Supporting Sources

Next Step

Use the Mortgage Calculator to compare different loan types and down payments. Then, check if your income supports the loan with the Home Affordability Calculator.

Frequently Asked Questions

FHA vs. Conventional vs. VA: Which loan is cheapest overall?

For a $300,000 home, a VA (U.S. Department of Veterans Affairs) loan is almost always the cheapest because it allows 0% down and has no monthly mortgage insurance. A conventional loan is the second cheapest long-term because PMI (private mortgage insurance) can be canceled. An FHA (Federal Housing Administration) loan is the most accessible for low credit scores but the most expensive over 30 years due to lifelong MIP (mortgage insurance premium).

Can I get a VA loan if I am not a veteran?

No. U.S. Department of Veterans Affairs (VA) loans are reserved for eligible active-duty service members, veterans, and qualifying surviving spouses with a Certificate of Eligibility. If you are not eligible, your main options are a conventional loan — best with strong credit and at least 5% down — or a Federal Housing Administration (FHA) loan, which accepts lower credit scores with 3.5% down but carries mortgage insurance premium (MIP) costs.

Who should choose a conventional loan over an FHA loan?

Conventional loans fit borrowers with a 660+ FICO (Fair Isaac Corporation) credit score and at least 5% down who want the lowest lifetime cost. Private mortgage insurance (PMI) on conventional loans can be canceled at 80% loan-to-value (LTV), unlike FHA mortgage insurance premium (MIP) on many loans. Choose FHA when your credit score is below 620 or you need the lowest upfront cash requirement.

What is the minimum credit score for each loan type in 2026?

Federal Housing Administration (FHA) loans are the most flexible, often allowing FICO scores as low as 580 with 3.5% down. Conventional loans typically require 620+, though some first-time buyer programs accept 600 with higher PMI. VA loans have no official government minimum, but most lenders require 580-620 based on their own overlays and risk models.

Do VA loans have mortgage insurance?

No monthly mortgage insurance. U.S. Department of Veterans Affairs (VA) loans do not charge private mortgage insurance (PMI) or FHA-style mortgage insurance premium (MIP). Instead, most borrowers pay a one-time VA funding fee at closing, which can be rolled into the loan amount. Disabled veterans and certain other eligible borrowers may qualify for a funding fee waiver.

Which loan is best for first-time buyers with limited cash?

VA loans are best if you qualify — 0% down and no monthly insurance. If ineligible, Federal Housing Administration (FHA) loans require just 3.5% down and accept lower credit scores. Conventional first-time buyer programs can go as low as 3% down but often need 620+ credit to avoid expensive PMI. Compare total monthly PITI (Principal, Interest, Taxes, and Insurance), not just down payment.

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Federal Housing Administration (FHA) vs Conventional vs U.S. Department of Veterans Affairs (VA) — Which Saves You Most?