VA Loan vs. Conventional: Which Is Actually Better?
Veterans often wonder if they should use their VA benefit or go conventional. The answer isn't always obvious, but the math usually points in one direction.
When you're eligible for a VA loan and also qualify for a conventional mortgage, it feels like a luxury problem. Both will get you a house. But the financial differences over 30 years can be staggering. Let's compare them honestly.
Down Payment
VA loan: $0 down, period. Conventional: you can put as little as 3% down, but anything less than 20% triggers private mortgage insurance (PMI), which adds $100–$300/month to your payment and doesn't go away until you hit 20% equity. On a $350,000 home, 20% down is $70,000. The VA loan lets you keep that money invested, in an emergency fund, or in your pocket.
Interest Rates
VA describes its loans as offering competitively low interest rates compared with other loan programs. Actual rates vary by borrower and market, so the best way to compare is side by side, using official Loan Estimates for both options.
The Funding Fee Factor
Most VA purchase loans include a one-time funding fee. In 2026, it ranges from 1.25% to 3.3% of the loan amount, depending on your down payment and whether you've used the benefit before. It can be financed into the loan. You're exempt if, for example, you receive VA compensation for a service-connected disability, are eligible for it but receive retirement or active-duty pay instead, or are a surviving spouse receiving DIC. VA lists all the exemptions on its funding fee page.
When Conventional Might Win
If you have 20%+ to put down, excellent credit (760+), and want to avoid the funding fee, a conventional loan can occasionally be cheaper in the short term. But this is a narrow scenario.
The Verdict
For many veterans, especially those with less than 20% to put down, a VA loan is worth a close look. The right choice depends on your situation, so let's compare real numbers.