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Short answer
A VA loan is guaranteed by the U.S. Department of Veterans Affairs for eligible veterans, service members, and certain surviving spouses; VA requires no down payment when the price is not above the appraised value and never requires monthly mortgage insurance, but most borrowers pay a one-time funding fee unless exempt. A conventional loan is open to anyone who qualifies, has no funding fee, and adds PMI when you put less than 20% down. If you are eligible for VA, compare both on Loan Estimates, especially with a larger down payment or a funding fee exemption.
| Feature | VA loan | Conventional loan |
|---|---|---|
| Who can use it | Eligible veterans, service members, and certain surviving spouses with a COE | Anyone who meets the lender's and investor's requirements |
| Down payment | None required by VA if the price is not above the appraised value | As little as 3% down for eligible first-time buyers |
| Monthly mortgage insurance | Never required | PMI with less than 20% down; can be removed later |
| Upfront government fee | VA funding fee (0.5% to 3.3%), unless exempt | None |
| Occupancy | You must live in the home | Primary home, second home, or investment property |
| Loan limit | No VA limit with full entitlement | $832,750 baseline for one unit in 2026 |
| Credit score | VA has no minimum score; lenders set their own VA credit guidelines | Lender and investor rules; Fannie Mae's DU has no fixed minimum since Nov. 2025 |
VA sets the rules for who qualifies and guarantees part of each loan, but it does not make most loans itself. As the CFPB puts it, VA loans are underwritten, closed, and serviced entirely by private lenders. Your lender reviews your credit, income, and the property just as it would for any other mortgage.
To use the benefit for a purchase, VA's purchase loan page says all of these must be true:
The CFPB lists other VA features: no PMI requirement, limits on the closing costs you can be charged, and the right to pay off the loan early without a penalty.
A conventional loan is any mortgage that is not insured or guaranteed by the government. Most follow Fannie Mae or Freddie Mac rules. For 2026, the baseline conforming loan limit for a one-unit home is $832,750 (higher in high-cost areas). Eligible first-time buyers can put as little as 3% down, and PMI applies until you build enough equity.
The funding fee is a one-time payment. VA says it helps lower the cost of the program for taxpayers, since VA loans do not require down payments or monthly mortgage insurance. It is a percentage of the loan amount, not the purchase price. On a purchase, the funding fee is the only cost VA lets you finance into the loan; other closing costs are paid at closing. These rates apply to loans closing on or after April 7, 2023 and before November 14, 2031.
| Your down payment | First use | After first use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
For other VA loan types, the fee is 2.15% (first use) or 3.3% (after first use) for a VA cash-out refinance, and 0.5% for an Interest Rate Reduction Refinance Loan (IRRRL).
According to VA, you will not pay the funding fee if any of these is true:
If VA later awards you compensation with an effective date before your closing, you may be able to get a refund of the fee.
If you have full entitlement, VA says you do not have a loan limit, as long as you can afford the loan and the appraisal supports the price. Your COE shows your entitlement. If part of your entitlement is still tied to another VA loan, your remaining entitlement is based on the county loan limit, and a down payment may be needed for a larger loan. Even with full entitlement, the loan cannot be more than the appraised value or the purchase price, whichever is lower. Ask your loan officer to review your COE before you shop for homes.
VA is a strong benefit, but it is not automatically the right fit. Compare a conventional option too if:
If you are exempt from the funding fee, VA's lack of monthly mortgage insurance and upfront fee can make it hard to match. If you are not exempt, the math depends on your down payment, credit, and how long you plan to keep the loan.
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No. VA loans do not require monthly mortgage insurance. Most borrowers pay a one-time VA funding fee instead, unless they are exempt.
For a first-time purchase with less than 5% down, the fee is 2.15% of the loan amount. It drops to 1.5% with 5% or more down and 1.25% with 10% or more down. After first use with less than 5% down, it is 3.3%.
Veterans receiving VA compensation for a service-connected disability, those eligible for compensation but receiving retirement or active-duty pay instead, surviving spouses receiving DIC, certain service members with a pre-discharge rating, and active-duty members who received a Purple Heart, among others listed by VA.
If you have full entitlement, VA does not set a loan limit, as long as you can afford the loan and the appraisal supports the price. If part of your entitlement is in use, limits can apply.
Yes. The CFPB notes that VA eligibility can be restored, for example after you sell the home and pay off the loan, and you may also have remaining entitlement while another VA loan is open. The funding fee is higher after first use when you put less than 5% down.
No. VA purchase loans require that you live in the home you buy with the loan.
This page is general education, not a loan offer, commitment, or approval. Program rules and figures change; the figures here were checked against the sources below in October 2026. Your options depend on your credit, income, property, and each lender's guidelines. All loans are subject to approval.
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This page explains the rules. For your situation, compare options yourself or talk with a licensed loan officer.