Conventional Loan vs VA Loan
Conventional Loans: 3%
For example, if you are buying a home for $200,000, the minimum down payment would be $6,000.
VA Loans: 0%
For example, if you are buying a home for $200,000, the minimum down payment would be zero, zilch, nada.
Conventional: 620+
The minimum credit score required for a conventional loan can vary depending on the lender and the specific terms of the loan. In general, you will need a credit score of 620 or higher to be considered for a conventional loan. However, some lenders may require a higher credit score, especially for loans with a low down payment or higher loan-to-value ratio.
VA: No minimum credit score
However, lenders may set their own credit score requirements, and they may require a higher credit score if you are seeking a VA loan with a low down payment. In general, lenders prefer to see a credit score of at least 620, and some may require a higher score.
Brought to you by Fannie Mae 12/28/2022.
Conventional: $726,200
Brought to you by HUD 12/28/2022.
VA: Eligible Veterans, service members, and survivors with full entitlement no longer have limits on loans over $144,000. This means you won’t have to pay a down payment, and the VA will guarantee to the lender that if you default on a loan that’s over $144,000, the VA will pay them up to 25% of the loan amount.
Conventional: None
VA: 2.3% of the loan amount & waived if you’re a disabled vet
The fee is used to help fund the VA home loan program, and it is collected as part of the loan process.
The VA funding fee is typically a percentage of the loan amount, and the exact percentage varies depending on your military status, the type of loan you are getting, and whether you are making a down payment.
| Type of Loan | Down Payment | Funding Fee |
|---|---|---|
| First-time VA loan user | 0% | 2.3% of loan amount |
| First-time VA loan user | 5% or more | 1.65% of loan amount |
| Repeat VA loan user | 0% | 3.6% of loan amount |
| Repeat VA loan user | 5% or more | 1.65% of loan amount |
| VA loan user with a service-connected disability | 0% | 0% of loan amount |
Conventional
In a conventional loan, you will pay monthly PMI, or private mortgage insurance, if you put less than 20% down. PMI is a type of insurance that protects the lender in the event that a borrower defaults on their mortgage.
VA
Thank you for your service. You pay no mortgage insurance.
Conventional
A borrower may need to meet certain income and debt ratios in order to be eligible for a conventional loan.
VA
VA loans may have more lenient requirements.
Example
In a conventional loan, if you have a low credit score (650), the lender may not allow your DTI to exceed 45%.
A FHA loan will allow a max DTI of 50%. However, in a VA loan, depending on your qualifications, your DTI may exceed 50%.