Should a veteran always choose a VA loan over conventional?

In nearly all cases, yes. The combination of zero down payment, no PMI, and lower interest rates makes VA loans significantly cheaper. The only exceptions are buying investment or second homes (VA is primary residence only) or when the funding fee is high on subsequent use and you have a large down payment.

Does the VA funding fee make VA loans more expensive?

No, even with the funding fee, VA loans are typically much cheaper than conventional loans. The funding fee is a one-time cost of 1.25%-3.3%, while conventional PMI costs 0.5%-1.5% annually for years. VA's no-PMI benefit more than offsets the funding fee.

Can I use both VA and conventional loans at the same time?

Yes. Many veterans use a VA loan for their primary residence and a conventional loan for a second home or investment property. This maximizes the VA benefit while allowing other property purchases.

Do sellers prefer conventional offers over VA?

Some sellers historically preferred conventional offers due to VA appraisal requirements, but this perception is changing. VA appraisals protect the buyer, and a strong VA offer with competitive terms is just as attractive to most sellers.

VA vs. Conventional: Compare Your Best Options

For eligible veterans, VA loans almost always win — zero down, no PMI, and lower rates. See the full comparison and the rare situations where conventional might make more sense.

VA vs. Conventional: Head-to-Head

If you are eligible for a VA loan, it is almost always the better choice compared to a conventional mortgage. The combination of no down payment, no PMI, and lower interest rates creates significant savings. However, there are a few specific scenarios where conventional may be worth considering.

Feature	VA	Conventional
Down Payment	0%	3%–20%
Mortgage Insurance	None (ever)	PMI required <20% down
Funding/Guarantee Fee	1.25%–3.3% (one-time, waivable)	None
Interest Rates	~0.25%–0.50% lower	Market standard
Min. Credit Score	No VA minimum (620 typical)	620
Property Types	Primary residence only	Primary, second, investment
Loan Limits	None (full entitlement)	$766,550–$1,149,825
Appraisal	VA appraisal required	Standard appraisal

Why VA Almost Always Wins

No Down Payment Savings

On a $400,000 home, conventional requires $20,000–$80,000 down. VA requires $0. That money can stay invested, earning returns instead of being tied up in the home.

No PMI Savings

Conventional PMI on a $400,000 loan with 5% down costs ~$200–$300/month. Over the 7+ years until it drops off, that is $17,000–$25,000 in savings with VA.

Lower Rate Savings

A 0.25% lower rate on a $400,000 loan saves ~$60/month or $21,600 over 30 years. Combined with no PMI, VA saves $40,000–$50,000+ total.

When Conventional Might Win

Rare Situations Favoring Conventional

Buying a second home or investment property — VA is primary residence only
Subsequent VA use with high funding fee (3.3%) — if you have 20%+ down, conventional has no fee at all
Competitive purchase offers — some sellers (incorrectly) view VA offers as weaker due to VA appraisal requirements
Preserving VA entitlement — if you plan to buy a more expensive primary residence later

The Bottom Line

For eligible veterans buying a primary residence, the VA loan wins in virtually every scenario. The zero down payment, no PMI, and lower rates create massive long-term savings that easily outweigh the one-time funding fee. Use VA for your primary home, and conventional for any secondary or investment properties.

Check today's VA rates or use our VA calculator to estimate your payment. Learn more about VA loan details.