VA loans · decision guide
VA vs. Conventional: Decide on Four Facts, Not Vibes
Most comparisons bury the decision in feature lists. It usually comes down to four things: your down payment, your funding-fee status, how long you'll hold the loan, and whether the property fits VA rules. Here is each one, sourced.
By Mario Bailey — U.S. Air Force veteran · current Air National Guard member. Data updated 2026-06-10.
1. Down payment
The VA purchase loan requires no down payment in most cases and no private mortgage insurance at any down payment level, per va.gov. Conventional loans typically require private mortgage insurance when you put down less than 20%, per the Consumer Financial Protection Bureau — a recurring monthly cost until you reach sufficient equity. The less you're putting down, the more the comparison tilts VA. At 20% down, conventional sheds PMI and the race tightens.
2. Your funding-fee status — the swing variable
The VA loan's cost is concentrated in one number: the funding fee, currently 2.15% on a first-use purchase with less than 5% down and 3.3% on subsequent use (va.gov fee charts, retrieved 2026-06-10). If you're exempt — receiving or eligible for VA disability compensation, among other categories — that cost is $0 and the VA loan becomes very hard to beat: nothing down, no PMI, no fee. If you're not exempt and re-using the benefit, that 3.3% is real money and deserves an honest comparison against the PMI quote in front of you. Run your exact fee here — and note that a service-connected rating you haven't claimed yet changes this math permanently.
3. How long you'll hold the loan
The funding fee is paid once; PMI accrues monthly until it cancels. That makes hold time the deciding factor for non-exempt borrowers: short holds favor avoiding the upfront fee, long holds favor avoiding years of PMI. Compare your actual numbers — your lender's PMI quote against the fee from our calculator — rather than anyone's "typical" figures, including ours: we don't publish PMI averages because there is no authoritative one. VA loans also carry no prepayment penalty, per va.gov.
4. The property and the exit
VA purchase loans are for homes you'll live in as your primary residence, per va.gov — investment properties and second homes are conventional territory. On the exit side, VA loans are assumable: a qualified buyer can take over your loan at its existing rate (assumption fee: 0.5% per the VA fee schedule). If you buy at a low rate and sell in a higher-rate market, an assumable mortgage is a genuine pricing advantage almost no conventional loan offers.
The short version
| Your situation | Lean |
|---|---|
| Funding-fee exempt (any VA disability compensation) | VA, almost always |
| Little or no down payment | VA — $0 down, no PMI |
| 20%+ down, not exempt, strong credit | Genuinely compare — conventional avoids the fee, VA still skips PMI |
| Second home or investment property | Conventional — VA requires owner occupancy |
| Subsequent VA use, not exempt, short expected hold | Compare the 3.3% fee against your PMI quote |
Frequently asked questions
Is a VA loan always better than conventional?
No. The VA loan dominates when you have little down payment, when you are exempt from the funding fee, or when PMI would be expensive for you. Conventional can win when you have 20% down (no PMI applies), when the property won't pass VA appraisal requirements, or when it's not going to be your primary residence — VA purchase loans require you to occupy the home.
Does a VA loan require PMI?
No. Per va.gov, VA-backed loans require no private mortgage insurance regardless of down payment. Conventional loans typically require PMI when you put down less than 20%, per the CFPB.
What does it mean that VA loans are assumable?
A qualified buyer can take over your VA loan at its existing interest rate, subject to lender/VA approval and a 0.5% assumption fee per the VA fee schedule. In a high-rate market, a low-rate assumable mortgage is a genuine selling asset most conventional loans can't offer.
Can I use a VA loan more than once?
Yes. The benefit is reusable, and you can have full entitlement restored after selling and paying off a prior VA loan. The funding fee is higher on subsequent use unless you're exempt — see the current rate chart on our funding fee page.
SOURCE: VA purchase loan page, va.gov; CFPB on PMI; VA funding fee charts · retrieved 2026-06-10
Related
- Confirm you're eligible (Guard/Reserve paths included)
- Calculate your exact funding fee — or confirm you're exempt
- Your combined rating — the number that drives the exemption