VA Loan vs. Conventional Loan: Key Differences Explained

The differences between a VA loan versus a conventional loan include the eligibility, down payment and mortgage insurance requirements. Both types of mortgages help you buy a home, but a VA loan is only for eligible military, veterans and qualifying spouses, while a conventional loan is for any borrower that meets minimum requirements.

What is a VA loan?

A VA loan is a mortgage guaranteed by the U.S. Department of Veteran Affairs (VA) for eligible active-duty military, veterans and surviving spouses. In most cases, there’s no need for a down payment. There isn’t a mortgage insurance requirement, either, nor limits on the amount you borrow. Like any other kind of mortgage, though, you’ll need to qualify from a credit and financial standpoint. These requirements vary by VA lender.

What is a conventional loan?

A conventional loan is the most common type of mortgage and available to any borrower who qualifies. A conventional loan may be conforming or non-conforming, but most are conforming loans, which means they adhere to guidelines set by Fannie Mae or Freddie Mac. These cover requirements like a minimum down payment and loan limits. 

What is the difference between a VA loan and a conventional loan?

If you’re eligible for both a VA loan and a conventional loan, you may be wondering which is the better option. Here are the key differences:

**Based on 2026 conforming loan limits; loan limits change yearly.

Borrower eligibility

VA loans are only for veterans, active-duty military and surviving spouses who meet the VA’s eligibility criteria. That includes having a Certificate of Eligibility (COE) that confirms you’ve met service requirements:

• Active duty military: 90 consecutive days of service
• Veterans: Depends on when you served and any disability status
• National Guard members: 6 years; at least 90 days, including 30 consecutive days of service; or at least 90 days of non-training service
• Reserve members: 6 years; or at least 90 days of non-training service
• Surviving spouses: Spouse is active-duty military who’s missing in action or a prisoner of war; or you’re receiving VA Dependency and Indemnity Compensation (DIC)

In contrast, conventional loans are open to anyone who meets the lender’s requirements.

Credit score

Neither VA loans nor conventional loans have a minimum credit score, though most lenders look for a FICO score of at least 620. Some VA lenders approve borrowers with lower scores, so if your credit needs work, a VA loan may be easier to get.

Debt-to-income ratio (DTI)

To help determine how much you can borrow, lenders look at your debt-to-income ratio (DTI), the portion of your gross income spent on debt payments, including the mortgage. Generally, a VA loan allows a DTI of no more than 41%, whereas conventional loans allow anywhere from 36%-50%. (The higher range comes into play if you have what’s known as “compensating factors,” such as a larger down payment.)

It’s better to have a lower DTI, but you may need a higher threshold if you’re buying a more expensive home, have inconsistent income or other unique circumstances.

Down payment

Conventional loans require a down payment of at least 3% or 5% depending on whether you’re a first-time home buyer or getting a fixed- or adjustable-rate loan. VA loans don’t require a down payment in most situations. You may need to make one if you don’t have full entitlement.

Property types

You can use either a conventional loan or VA loan to buy a primary residence (the home you’ll live in). You can also use a conventional loan to buy an investment or rental property, or a second home or vacation home. You can’t use a VA loan to buy these additional types of properties. 

VA loans also have “Minimum Property Requirements” (MPRs), which means the home you buy has to meet certain standards pertaining to safety, structure and sanitation. This includes things like adequate heating, grading and drainage. The MPRs help protect you. Conventional loans don’t apply this same scrutiny.

Loan limits

Conventional loans are subject to conforming loan limits, a cap on the loan amount based on your location. These limits change every year. In 2026, most counties have a conforming loan limit of $832,750 for a single-family property. If you need a bigger mortgage, you’ll need to take out a jumbo or non-conforming loan.

VA loans, on the other hand, don’t have loan limits in most cases. If you currently have a VA loan you’re still repaying, your lender may impose a limit or require a down payment.

Mortgage insurance

VA loans don’t require you to pay mortgage insurance, even with no money down. If you put less than 20% down on a conventional loan, however, you’ll be required to pay for private mortgage insurance (PMI). This insurance protects the lender if you’re unable to repay the loan. You’ll keep paying PMI until you pay down your mortgage to 80% of the home’s price.

Fees

Although VA loans don’t require mortgage insurance, you’ll pay a one-time funding fee that costs 0.5%-3.3% of the loan amount, depending on whether you’re buying a home or refinancing and other factors.

In addition, both VA loans and conventional loans come with closing costs, such as an appraisal fee and title services fees. However, VA loans specify certain “non-allowable” fees, such as a loan application fee. This may save you money compared to a conventional loan.

Is a VA loan better than a conventional loan?

For individuals who qualify, a VA loan makes it much easier to buy a home, especially if you don’t have a lot of money for a down payment and mortgage insurance. Simply put, it’s one of the best options for a mortgage out there.

Still, if you have good to excellent credit and a larger down payment, a conventional loan may be the better route. A conventional loan is also the only option if you’re buying an investment property or second home. An experienced loan officer can help you navigate your options.

*Zillow Home Loans; an equal housing lender. NMLS #10287