If you are a veteran or active-duty service member buying a home, you have probably seen both VA loans and FHA loans mentioned as options. Both are government-backed mortgage programs with more flexible requirements than conventional loans, but they work very differently and one will almost always save you more money than the other.
Scott Carlin at TrueVet Mortgage is a 20-year Air Force veteran and licensed mortgage broker who helps military families in Florida and Texas choose the right loan for their situation. In most cases, the VA loan wins — but there are situations where an FHA loan might make more sense. Here is a side-by-side breakdown so you can see for yourself.
The Biggest Difference: Monthly Mortgage Insurance
This is where the VA loan pulls away from every other loan program. VA loans never require monthly mortgage insurance, regardless of your down payment. FHA loans require both an upfront mortgage insurance premium of 1.75 percent of the loan amount and an annual mortgage insurance premium that gets added to your monthly payment for the life of the loan in most cases.
On a $300,000 loan, FHA monthly mortgage insurance adds roughly $150 to $200 per month to your payment. Over 30 years, that is $54,000 to $72,000 in extra costs that you would never pay with a VA loan.
If you are eligible for a VA loan, this single difference is usually enough to make it the better choice.
Down Payment Comparison
VA loans require zero down payment. You can finance 100 percent of the home’s purchase price.
FHA loans require a minimum down payment of 3.5 percent if your credit score is 580 or higher. If your score is between 500 and 579, the minimum down payment jumps to 10 percent.
On a $350,000 home, that means:
VA loan down payment: $0
FHA loan down payment (3.5 percent): $12,250
FHA loan down payment (10 percent): $35,000
For military homebuyers, especially those using BAH to qualify or who are in the middle of a PCS move, zero down payment is a significant advantage. It means you keep more cash in your pocket for moving expenses, furniture, and emergencies.
Interest Rates
VA loans typically offer interest rates that are 0.25 to 0.50 percent lower than FHA loans. This is because the VA guaranty reduces the lender’s risk, which allows them to offer more competitive pricing.
A quarter point difference might not sound like much, but on a $300,000 loan over 30 years, a 0.25 percent lower rate saves you approximately $15,000 in total interest.
Your exact rate depends on your credit score, loan amount, and market conditions. As a broker with access to over 120 lenders, Scott Carlin shops your rate across multiple wholesale lenders to find the best deal available.
Credit Score Requirements
The VA does not set a minimum credit score for VA loans. Most lenders require at least 580 to 620, but the guidelines are flexible and your overall financial picture matters more than a single number.
FHA loans have a minimum credit score of 580 for the 3.5 percent down payment option. If your score is between 500 and 579, you can still qualify but you will need 10 percent down.
For borrowers with lower credit scores, FHA loans can be easier to qualify for. If your credit score is below 580 and you do not have funds for a large down payment, an FHA loan might be your best short-term path to homeownership until you can refinance into a VA loan later.
Funding Fee vs Mortgage Insurance Premium
VA loans have a one-time VA funding fee. For first-time users with zero down, the fee is 2.15 percent of the loan amount. This fee can be financed into the loan so it does not come out of pocket at closing. Veterans with a service-connected disability rating of 10 percent or more are completely exempt from the funding fee.
FHA loans have an upfront mortgage insurance premium of 1.75 percent of the loan amount, plus an annual premium of 0.15 to 0.75 percent that is added to your monthly payment. On most FHA loans, you pay that annual premium for the entire life of the loan unless you refinance into a different loan type.
Even though the VA funding fee is slightly higher upfront than the FHA upfront premium, the VA loan saves you far more money over time because there is no ongoing monthly cost. And if you have a disability rating, the VA loan has zero upfront or ongoing fees.
Debt-to-Income Ratio
FHA loans allow a debt-to-income ratio up to 43 percent, and in some cases up to 50 percent with strong compensating factors.
VA loans use a similar DTI guideline of 41 percent, but the VA also uses a residual income test that measures how much money you have left over each month after all major expenses. This residual income approach can actually make it easier to qualify for a VA loan because it looks at your full financial picture rather than a single ratio.
Both loan types are more flexible than conventional loans when it comes to DTI, but the VA’s residual income model gives borrowers an additional path to approval.
Property Requirements
Both VA and FHA loans require the property to meet minimum standards. VA loans require the home to pass a VA appraisal that checks for safety, soundness, and sanitary conditions. FHA loans have similar minimum property requirements.
Both loan types can be used for single-family homes, condominiums (with approval), townhouses, and multi-unit properties up to four units as long as you live in one of them.
Neither loan type can be used for investment properties or vacation homes. The home must be your primary residence.
Loan Limits
For veterans with full entitlement, there is no VA loan limit. You can borrow as much as a lender is willing to approve based on your income and credit.
FHA loans have county-level limits. In most Florida counties, the 2026 FHA loan limit for a single-family home is $541,287. In higher-cost areas, the limit can go up to $1,249,125.
If you are buying a more expensive home, the VA loan gives you significantly more flexibility.
When an FHA Loan Might Be Better
In most cases, the VA loan is the better deal for eligible veterans. But there are a few situations where an FHA loan could make sense:
Your credit score is below 580 and you have enough for a down payment. FHA allows scores as low as 500 with 10 percent down. Most VA lenders want at least 580.
You are not eligible for a VA loan. If you do not meet the minimum service requirements or are not a veteran, active-duty service member, or surviving spouse, the FHA loan is your best government-backed option.
You are buying a property that does not meet VA appraisal standards and the seller will not make repairs. In some cases, FHA may be slightly more flexible on certain property issues.
If you are unsure which loan is right for your situation, Scott Carlin at TrueVet Mortgage can run the numbers on both options and show you exactly which one saves you more money.
VA Loan vs FHA Loan: Side-by-Side Summary
Down payment: VA loan requires zero. FHA requires 3.5 percent minimum.
Monthly mortgage insurance: VA loan has none. FHA charges it for the life of the loan.
Upfront fee: VA charges a funding fee of 2.15 percent (exempt with disability). FHA charges 1.75 percent.
Interest rates: VA rates are typically 0.25 to 0.50 percent lower than FHA.
Credit score: VA has no official minimum (most lenders want 580 to 620). FHA minimum is 580 for 3.5 percent down or 500 for 10 percent down.
Loan limits: No limit for VA with full entitlement. FHA has county-level limits.
Occupancy: Both require primary residence only.
Closing timeline: TrueVet Mortgage typically closes both VA and FHA loans in 21 to 30 days.
Talk to a VA Loan Specialist
If you are a veteran or active-duty service member, the VA loan is almost always the best mortgage available to you. Zero down, no monthly mortgage insurance, lower rates, and no loan limits with full entitlement — no other program comes close.
Scott Carlin is a 20-year Air Force veteran and mortgage broker licensed in Florida and Texas. He works directly with every client from pre-approval to closing. No call centers, no hand-offs.
Call 321-364-4461 or schedule a free consultation to compare your VA and FHA loan options side by side.
