On a $350,000 home, an FHA vs VA loan decision can change your five-year cash position by $21,550 before considering appreciation. In this worked example, an FHA buyer puts 3.5% down, or $12,250, and finances a $5,911 upfront mortgage insurance charge. A qualified VA buyer puts $0 down and finances a $7,525 funding fee. At assumed 30-year fixed rates of 6.50% for FHA and 6.125% for VA, both examples land near $2,172 per month for principal and interest. The FHA payment also includes about $155 monthly mortgage insurance, creating a $9,300 five-year payment difference. Add the FHA down payment, and the FHA buyer has put $21,550 more into the transaction over five years, excluding shared costs such as taxes, insurance, and closing expenses.
That does not make VA automatically better for every household. Eligibility, property condition, seller negotiations, funding-fee exemptions, and your long-term plans still matter. But for an eligible veteran, service member, or qualified surviving spouse, VA financing is often one of the strongest paths to homeownership.
Table of Contents
- The core FHA vs VA loan difference
- Down payment, credit, and mortgage insurance
- Local price context and payment strategy
- Why a broker comparison matters
- Prequalification without a hard credit hit
- FHA vs VA loan FAQs
The Core FHA vs VA Loan Difference
FHA is designed for buyers who may have limited down payment funds, developing credit, or a higher debt-to-income ratio. VA is reserved for qualified military borrowers and is backed by a federal guaranty program. Both can support a primary residence purchase, but their cost structures are very different.
FHA commonly permits a 3.5% down payment with a 580 credit score. Some files below 580 may require 10% down, and individual program providers can impose stricter overlays. VA does not publish a universal minimum credit score, although many program providers commonly look for a 580 to 620 score range. A stronger profile can improve approval options and pricing under either program.
The biggest distinction is ongoing mortgage insurance. FHA typically charges an upfront mortgage insurance premium of 1.75% and annual mortgage insurance. On a 30-year FHA loan above 90% loan-to-value, a commonly used annual charge is 0.55% of the base loan amount. VA has no monthly mortgage insurance. Instead, a first-time VA borrower with less than 5% down commonly pays a 2.15% funding fee, unless exempt because of qualifying service-connected disability compensation or another exemption.
For reference, the 2025 national baseline conforming loan limit was $806,500, according to the Federal Housing Finance Agency. FHA and VA county loan limits vary, so a broker should confirm the applicable limit before you write an offer, particularly in higher-priced markets.
Down Payment, Credit, and Mortgage Insurance
The FHA example above starts with a $337,750 base loan after the $12,250 down payment. Its 1.75% upfront premium equals $5,911, bringing the financed balance to approximately $343,661. At 6.50%, the principal-and-interest payment is roughly $2,172. Adding estimated FHA mortgage insurance of $155 brings the housing-finance portion to about $2,327 monthly.
The VA example begins with a $350,000 base loan and no down payment. The 2.15% funding fee is $7,525, producing a financed balance of $357,525. At 6.125%, principal and interest is approximately $2,172 per month. The rate assumptions are illustrations, not quotes, but the math shows why the absence of monthly mortgage insurance can be meaningful.
FHA can still be the practical answer when VA eligibility is unavailable, when a buyer wants to preserve VA entitlement, or when a property and contract are better suited to FHA terms. FHA may also be useful for a buyer rebuilding credit after an event that makes conventional financing harder. VA generally becomes compelling when the buyer has entitlement, plans to keep the property for several years, and wants to minimize cash needed for the down payment.
Closing costs often run roughly 2% to 5% of the purchase price, depending on the market, title charges, prepaid taxes, insurance, and negotiated seller concessions. On a $350,000 purchase, that is about $7,000 to $17,500. Ask about our no-out-of-pocket closing options if cash preservation is a priority. Separately, our preferred title company can save an additional $2,000 on average, subject to the transaction, title requirements, and local availability.
Local Price Context and Payment Strategy
In central Virginia, payment strategy matters because buyers are frequently balancing price, concessions, and competition. Redfin market data reported a median sale price near $390,000 in Henrico County in mid-2025. At that price, a 3.5% FHA down payment is $13,650, while an eligible VA borrower may preserve that cash for reserves, moving expenses, repairs, or a stronger offer structure.
Richmond, Glen Allen, and Midlothian illustrate three different buyer conversations. Richmond buyers may see more property-age and condition considerations. Glen Allen buyers often face competition for well-kept homes near established amenities. Midlothian buyers may compare newer construction against resale inventory and evaluate whether builder incentives outweigh a lower rate elsewhere. Inventory and pricing can shift quickly, but a preapproval based on accurate payment numbers gives you more room to negotiate with confidence.
For buyers in Virginia Beach, Chesapeake, or Hampton Roads, VA financing is especially common because of the area’s military presence. Sellers and agents may be familiar with VA appraisals, but no buyer should assume a contract will be easy. A home still must meet appraisal and property-condition standards, and the purchase price still has to make sense.
Cash reserves are another overlooked factor. FHA and VA do not always impose a universal reserve requirement for a standard one-unit primary residence, but reserves can strengthen a file. A practical target is two months of total housing payment after closing. On a $2,800 all-in housing payment, that means $5,600 remaining in verified funds. Multi-unit properties, lower credit, higher debt ratios, and layered risk factors may call for more.
Why a Broker Comparison Matters
A mortgage broker can compare program options across multiple wholesale channels, while a single-shelf institution can offer only its own menu. The value is not a guaranteed rate or approval. It is the ability to compare FHA, VA, conventional, bank statement, Non-QM, DSCR, jumbo, construction, and 203k options when your file does not fit one narrow box.
| Decision point | Mortgage broker | Single-shelf institution |
|---|---|---|
| Program access | Can compare multiple wholesale program sources | Limited to its internal program menu |
| FHA and VA review | Can evaluate fit and overlays across available options | Uses one set of internal overlays |
| Nontraditional income | May compare bank statement, DSCR, and Non-QM paths | May have fewer alternatives outside core products |
| Pricing review | Can review competing rate-and-fee structures | Offers its own pricing structure |
| Credit entry point | May offer a soft credit pull before full application | Process varies by institution |
The right comparison is not simply FHA versus VA. It can be VA versus conventional with 5% down, FHA versus a 3% conventional option, or a primary-residence loan versus a bank statement approach for a self-employed buyer. Terms, rates, and eligibility change by borrower profile and property.
Start With a Clear Credit Picture
A soft credit pull mortgage review can help you understand likely options before a full application. For buyers concerned about a no hard inquiry mortgage pre approval process, ask for a mortgage pre approval without hard pull review when appropriate. A soft pull mortgage broker can assess score ranges, liabilities, and estimated purchasing power without a hard inquiry at the first conversation.
A no credit hit mortgage application is not the same as a final approval. Once you select a program and move toward underwriting, a full credit report and documentation may be required. Still, protecting your credit during early research can make it easier to compare scenarios before you commit.
Duane Buziak, NMLS #1110647, is licensed to originate in Virginia, Florida, Tennessee, and Georgia. For buyers in those states, UpLending can review FHA, VA, conventional, and specialty financing options with transparent terms and a practical payment-first approach.
FHA vs VA Loan FAQs
Is VA always cheaper than FHA?
Not always, but VA often has a lower monthly cost because it does not require monthly mortgage insurance. Compare the funding fee, rate, seller concessions, and how long you expect to own the home.
Can I use an FHA loan with a 580 score?
A 580 score may allow 3.5% down under FHA guidelines. Approval still depends on income, debts, assets, property, and program-provider requirements.
Does VA require a down payment?
Many eligible VA borrowers can purchase with no down payment, provided the appraisal supports the price and entitlement and underwriting requirements are met.
Can the VA funding fee be financed?
Yes. In many cases, the VA funding fee can be added to the loan amount, as shown in the $350,000 example.
Does FHA mortgage insurance go away?
For many FHA loans with less than 10% down, mortgage insurance lasts for the life of the loan unless you refinance, sell, or pay off the loan.
Can sellers help with closing costs?
Often, yes. Seller concessions are subject to program rules, appraisal considerations, and negotiation. They can reduce the cash you need at closing.
Can I buy a duplex with FHA or VA?
Both may work for an owner-occupied two- to four-unit property if you meet occupancy, appraisal, income, and reserve requirements.
Should I get prequalified before touring homes?
Yes. A soft-pull review can clarify your budget, expected cash to close, and the program that best supports your offer before you become emotionally attached to a property.
The best next move is to compare real payment scenarios against your available cash and timeline, not to chase a headline rate. A well-built preapproval can turn a confusing FHA versus VA choice into a home search with a clear ceiling, a clear strategy, and fewer surprises.
Legal disclaimer: This article is general educational information, not a commitment to provide financing, a rate quote, credit decision, or legal or tax advice. Loan approval, rates, fees, mortgage insurance, eligibility, and closing costs depend on credit, income, assets, occupancy, property, program requirements, and market conditions. Financing is available only where properly licensed. Duane Buziak is licensed in Virginia, Florida, Tennessee, and Georgia; inquiries and applications must be limited to those licensed states.
Duane Buziak, Mortgage Maestro | NMLS: 1110647 | Licensed in VA · FL · TN · GA | UWM PRO ELITE 2025 | UWM Top 20 Purchase LO Virginia 2025 | UWM Speed to Close Industry Leading 2025 | Scotsman Guide Top Originator 2025 & 2026 | VA Broker of the Year 2024-2025 | Top 1% Nationwide | Coast2Coast Mortgage | DuaneBuziakMortgageMaestro.com | duane@coast2coastml.com | (804) 212-8663
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.