If you're eligible for both, this comparison is usually short: the VA loan wins on cost. But "usually" isn't "always", and the exceptions are worth knowing before you choose.
Side by side
| VA loan | FHA loan | |
|---|---|---|
| Minimum down payment | $0 with full entitlement | 3.5% (10% at lower credit tiers) |
| Monthly mortgage insurance | None | Annual MIP, collected monthly, typically for the life of the loan |
| Upfront charge | Funding fee, 1.25%–3.30% by use and down payment; waived if exempt | Upfront MIP financed into the loan |
| Who can use it | Veterans, service members, and eligible surviving spouses | Any qualified borrower |
| Credit | No VA-set minimum; lenders set their own | Program minimums apply; lenders overlay |
| Residual income test | Yes — a VA-specific standard | No |
| Property standards | Minimum Property Requirements | HUD minimum property standards |
| Occupancy | Primary residence | Primary residence |
Where the money actually differs
The headline is the down payment, but the durable difference is monthly mortgage insurance. On an FHA loan the annual premium is collected every month, in most cases for as long as you hold the loan. A VA loan has none. Over a long hold, that single line item usually outweighs everything else in the table.
The VA funding fee offsets some of that upfront — but it is one time, it can be financed, and veterans receiving VA disability compensation and many surviving spouses are exempt entirely. Estimate yours on the funding fee calculator.
Where FHA can still be the right answer
- You aren't VA-eligible. Eligibility is the whole ballgame; check it against the service requirements guide.
- You need a non-occupant co-borrower. FHA accommodates this more readily than a VA joint loan.
- Your entitlement is tied up in an existing loan and a down payment is required either way — the comparison gets closer. See the entitlement guide.
- Property type. A specific lender's VA program may exclude a property a comparable FHA program allows.
What doesn't decide it
Interest rate alone. Pricing moves daily and by borrower profile, and comparing a quoted rate on one program against another without the mortgage-insurance line and the upfront charge tells you almost nothing about total cost. Compare payments and total cost, not rates.
Next steps
Read the broader VA vs. conventional comparison, then bring your actual numbers to a VA pre-qualification review so the comparison is run on your file rather than on averages.
We are an independent mortgage broker, not a lender, and not affiliated with the VA, HUD or FHA.
Sources: VA.gov — VA Funding Fee and Closing Costs; VA Lenders Handbook M26-7; HUD FHA Single Family Housing Policy Handbook 4000.1.