Last updated: June 2026
VA loans beat FHA loans in almost every category for eligible veterans: $0 down payment vs 3.5%, no monthly mortgage insurance vs 0.55% annual MIP, and typically lower interest rates by 0.25% to 0.50%. On a $300,000 home, a VA loan can save $150 to $300 per month compared to FHA. FHA is designed for non-veterans who need flexible credit requirements.
If you are a veteran or active-duty service member trying to decide between a VA loan and an FHA loan, the answer is usually straightforward: the VA loan wins on cost. But understanding exactly where and why it wins helps you make a confident decision — and know when FHA might still play a role.
I'm Barrett Henry — a Military Relocation Professional (MRP) and Broker Associate with REMAX Collective. I don't originate loans — I help Tampa Bay veterans understand their options and connect them with lenders who specialize in VA financing. Learn more about VA loan benefits at the U.S. Department of Veterans Affairs.
How Do VA and FHA Loans Compare Side by Side?
| Feature | VA Loan | FHA Loan |
|---|---|---|
| Down Payment | $0 (0%) | 3.5% minimum |
| Monthly Mortgage Insurance | None | 0.55% annual MIP (life of loan) |
| Upfront Insurance/Fee | VA funding fee: 2.15% (first use, $0 down) | Upfront MIP: 1.75% |
| Minimum Credit Score | No VA minimum; lenders typically require 580–620 | 580 (3.5% down) or 500 (10% down) |
| Interest Rates | Typically 0.25–0.50% below conventional | Similar to conventional |
| Loan Limits (2026) | No limit with full entitlement | $498,257 (most FL counties) |
| Occupancy Requirement | Primary residence only | Primary residence only |
| Property Types | 1–4 unit, condos (VA-approved), some townhomes | 1–4 unit, condos (FHA-approved), some townhomes |
| Seller Concessions | Up to 4% of sale price | Up to 6% of sale price |
| Who Can Use It | Veterans, active duty, Guard/Reserve, some spouses | Any qualified borrower |
How Does the Down Payment Difference Affect Your Cash at Closing?
On a $350,000 home, an FHA loan requires $12,250 down (3.5%). A VA loan requires $0. That is $12,250 you keep in your savings for moving costs, furniture, or an emergency fund. According to the VA, the $0 down payment benefit is the single most-used feature of the VA loan program, with over 80% of VA purchase loans involving no down payment.
What Is the Real Cost of FHA Mortgage Insurance vs the VA Funding Fee?
This is where the long-term math heavily favors the VA loan. FHA charges two types of mortgage insurance:
- Upfront MIP: 1.75% of the loan amount, financed into the loan. On a $300,000 loan, that is $5,250.
- Annual MIP: 0.55% of the loan amount per year, paid monthly. On a $300,000 loan, that is about $137/month — for the entire life of the loan.
The VA loan has no monthly mortgage insurance at all. It does have a one-time funding fee (2.15% for first-time use with $0 down), which comes to $6,450 on a $300,000 loan. But veterans with a service-connected disability rating of 10% or higher are completely exempt from the funding fee. Over 30 years, the FHA annual MIP on a $300,000 loan totals roughly $49,000 — money that VA loan borrowers never pay.
Not Sure Which Loan Fits Your Situation?
Barrett Henry (MRP) can walk you through the numbers for your specific scenario. No cost, no pressure — just clarity.
When Would an FHA Loan Be the Better Choice?
For eligible veterans, the VA loan is almost always superior. But FHA may make sense in a few narrow situations:
- You are not eligible for a VA loan. If you do not meet the service requirements or do not have a qualifying discharge, FHA is available to any borrower.
- The property is not VA-eligible.Some condos and property types that qualify for FHA loans may not be on the VA's approved list. Check the VA's condo approval database before assuming.
- You want to preserve your VA entitlement. Some veterans strategically use FHA for a smaller purchase and save their full VA entitlement for a larger home later. This is uncommon but can make sense in specific situations.
Can You Switch from an FHA Loan to a VA Loan?
Yes. If you currently have an FHA loan and are eligible for a VA loan, refinancing from FHA to VA eliminates the monthly MIP and may lower your rate. This is a standard VA purchase or rate-and-term refinance — not to be confused with the VA IRRRL (Interest Rate Reduction Refinance Loan), which is only for existing VA loans. Talk to a VA-experienced lender to see if the numbers make sense for your situation.
Sources
- U.S. Department of Veterans Affairs — VA Home Loan Program: va.gov/housing-assistance/home-loans
- U.S. Department of Housing and Urban Development — FHA Loan Requirements: hud.gov/buying/loans
- 38 CFR Part 36 — VA Loan Guaranty regulations
- 24 CFR Part 203 — FHA Single Family Mortgage Insurance regulations
Related VA Loan Guides
What can you afford with a VA loan?
VA loans allow $0 down with full entitlement
Tampa Bay avg: ~1.2% tax + ~0.8% insurance
Estimated Monthly Payment (PITI)
$2,796
Educational estimate only. 30-year fixed, no PMI (VA benefit). Does not include VA funding fee or HOA dues.
See full affordability calculator →Ready to get started?
What's your goal?
Barrett responds personally within 2 hours. No call centers, no pressure.
Frequently Asked Questions
Can you use both a VA loan and an FHA loan at the same time?
No, you cannot have both a VA loan and an FHA loan on the same property. However, you could potentially have a VA loan on one property and an FHA loan on another, as long as you meet the occupancy requirements for each. Both loan types require the home to be your primary residence.
Which loan is better for first-time homebuyers?
For eligible veterans and service members, the VA loan is almost always the better choice. It requires $0 down and has no monthly mortgage insurance, which can save $150 to $300 per month compared to an FHA loan on a $300,000 home. FHA loans are a solid option for non-veterans who cannot qualify for conventional financing.
Do FHA loans have lower credit score requirements than VA loans?
FHA loans have a published minimum of 500 (with 10% down) or 580 (with 3.5% down), set by HUD. The VA does not set a minimum credit score, but individual VA lenders typically require 580 to 620. In practice, the requirements are similar, though FHA offers a clearer floor.
Can you refinance from an FHA loan to a VA loan?
Yes, if you are an eligible veteran or service member, you can refinance an FHA loan into a VA loan. This eliminates the monthly MIP and can reduce your interest rate. You would need a VA Certificate of Eligibility and must meet standard VA underwriting requirements.
Which loan has higher closing costs?
Both loans have similar closing costs, typically 2% to 5% of the loan amount. However, FHA loans include a 1.75% upfront mortgage insurance premium, and VA loans include a funding fee (2.15% for first use with $0 down). Disabled veterans are exempt from the VA funding fee, which makes VA closing costs significantly lower in those cases.
Can you buy a multi-unit property with a VA or FHA loan?
Both VA and FHA loans allow you to purchase properties with 1 to 4 units, as long as you live in one unit as your primary residence. This house-hacking strategy works with either loan type, but the VA loan's $0 down and no monthly mortgage insurance make it the more cost-effective option for eligible veterans.