Veterans have a choice: the VA loan's 0% down and no PMI, or a conventional loan with potentially more flexibility. Here's the definitive comparison.
Veterans have a choice: the VA loan's 0% down and no PMI, or a conventional loan with potentially more flexibility. Here's the definitive comparison.
Feature
VA Loan
Conventional (5% dn)
Winner
Down Payment
0%
5%
VA
Monthly MI
None
$100–$300/mo (PMI)
VA
Upfront Cost
2.15% funding fee
None
Conventional
Interest Rate
~0.25–0.5% lower
Standard
VA
Credit Min
~580 (lender)
620
VA
Property Type
Primary only
Primary/2nd/Invest
Conventional
Loan Limit
None (full entitlement)
$766,550
VA
Seller Concessions
4%
3–9%
Depends
When VA Loan Wins
Any time you don't have 20% to put down — VA eliminates both down payment and PMI
When you want the lowest monthly payment (no PMI + lower rate)
When your credit is below 680 — VA is more flexible
When you plan to stay long-term — no PMI makes a massive difference over years
When Conventional Might Win
You have 20% down — no PMI either way, and no funding fee to pay
Buying a second home or investment property (VA is primary only)
You want to preserve VA entitlement for a future purchase
The home doesn't meet VA's Minimum Property Requirements
The Funding Fee Factor
The 2.15% VA funding fee ($7,525 on a $350K loan) is the main upside of conventional. However, no PMI ($200–$350/month) offsets this in 24–36 months. For most veterans staying 3+ years, the VA loan wins on total cost.
Frequently Asked Questions
Not always, but usually. The VA loan is almost always the better financial deal for primary home purchases because 0% down and no PMI are extraordinary benefits. The main exceptions: buying a second home or investment property (VA doesn't allow), having sufficient funds for 20%+ down (which eliminates PMI and the funding fee advantage), or when the property doesn't meet VA requirements.
Yes — you can have both simultaneously. Eligible borrowers can use a VA loan for their primary residence and conventional financing for a second home or investment property. You can also use VA benefits multiple times sequentially as long as you have sufficient entitlement remaining.
Disclaimer: Smart Mortgage Guide provides educational content only. We are not a licensed mortgage lender, broker, or financial advisor. Rates, limits, and program details are subject to change. Always consult with a licensed mortgage professional before making financial decisions.