Three major loan categories dominate the U.S. purchase market: conventional (backed by Fannie Mae or Freddie Mac), FHA (insured by the Federal Housing Administration), and VA (guaranteed by the Department of Veterans Affairs). Each has distinct rules on down payment, credit, mortgage insurance, and occupancy. Matching the program to your situation can save money and reduce stress.
| Feature | Conventional | FHA | VA |
|---|---|---|---|
| Minimum down payment | 3% | 3.5% | 0% |
| Typical credit minimum | 620 | 580 | Lender-set (often 580–620) |
| Mortgage insurance | PMI until ~20% equity | MIP (often life of loan if <10% down) | None |
| Occupancy | Primary, second, investment | Primary only | Primary only |
Run the same purchase price through the main mortgage calculator, the FHA loan calculator, and the VA loan calculator. Compare the total monthly payment including any insurance or funding fee. Factor in long-term costs as well—FHA MIP that lasts for the life of the loan can outweigh a slightly higher conventional rate once equity builds.
Eligibility also matters. VA loans require qualifying military service. FHA and conventional loans are open to almost any creditworthy borrower. If more than one program is available to you, the side-by-side payment comparison plus the total cost over five or ten years usually reveals the clear winner.