Conventional vs FHA vs VA vs USDA: Which Loan Fits You?
Most buyers fit more than one loan program, and the right choice can change your down payment, your monthly payment, and how much cash you need at closing. Here is a straight comparison of the four main programs, in plain language for buyers and with the guideline detail agents want. When you are ready, I will match your exact situation to the best fit.
Who each is best for.
Conventional
Solid credit and a little savings. The cheapest long-term option because the mortgage insurance eventually falls off.
Learn more →FHA
Lower credit or a higher debt load. Easier to qualify, with a tradeoff on mortgage insurance.
Learn more →VA
Veterans, active duty, and eligible spouses. The strongest loan in the country: zero down and no monthly mortgage insurance.
Learn more →USDA
Low-to-moderate income buyers in eligible areas, which covers a lot of NC, SC, and Georgia outside the city cores. Zero down with lower mortgage insurance than FHA.
Learn more →
Conventional
The default for buyers with decent credit (620 and up) and some savings. First-time buyers can put as little as 3% down, and 5% is typical otherwise. The big advantage is the mortgage insurance: it is only required if you put less than 20% down, and it cancels automatically once you reach about 20% equity. That makes conventional the lowest long-term cost for many buyers. It also has the highest loan limits, $832,750 in our NC, SC, and Georgia markets for 2026.
Best for: good credit, planning to build equity, want no lifelong mortgage insurance.
FHA
The flexible option, built for buyers with lower credit scores or more debt. You can buy with 3.5% down at a 580 score, and FHA is more forgiving of past credit events. The tradeoff is mortgage insurance: an upfront fee plus a monthly amount that stays for the life of the loan unless you put 10% or more down, or refinance later once you have equity.
Best for: credit in the 580 to 660 range, higher debt-to-income, or a recent credit bump to work around.
VA
If you qualify, this is the best mortgage available. For veterans, active-duty service members, and eligible surviving spouses. Zero down, no monthly mortgage insurance, competitive rates, and no set credit-score minimum from the VA. Instead of mortgage insurance there is a one-time funding fee, which is waived entirely for veterans with a service-connected disability. With full entitlement there is no loan limit.
Best for: anyone eligible. It is almost always the right call.
USDA
The most overlooked zero-down loan. Backed by the U.S. Department of Agriculture for low-to-moderate income buyers in eligible rural and many suburban areas, and much of NC, SC, and Georgia outside the urban cores qualifies. No down payment, and the mortgage insurance is lower than FHA. The two catches: your household income has to be under the area limit, and the home has to sit in an eligible area. I can check both in about a minute.
Best for: buying outside the city core with a moderate household income and little saved for a down payment.
Guideline detail for agents.
Scroll sideways on smaller screens to see every column.
| Feature | Conventional | FHA | VA | USDA |
|---|---|---|---|---|
| Best for | Good credit, building equity, no lifelong MI | Lower credit or higher debt load | Veterans, active duty, eligible spouses | Moderate income in eligible areas |
| Minimum down payment | 3% first-time buyer, 5% typical | 3.5% (580+ score) | 0% | 0% |
| Minimum credit score | 620 | 580 for 3.5% down (most lenders want 600+) | No VA minimum (lender overlays apply) | 640 automated, 600 manual |
| Mortgage insurance | Only under 20% down; cancels at ~20% equity | 1.75% upfront + ~0.55%/yr; life of loan unless 10%+ down | None; one-time funding fee (waived for disabled veterans) | 1% upfront + 0.35%/yr (lower than FHA) |
| 2026 loan limit | $832,750 baseline (up to $1,249,125 high-cost) | $541,287 most NC/SC/GA counties; higher in some metros (e.g. Charleston County) | No limit with full entitlement | No set limit; capped by income |
| Max debt-to-income | Up to ~50% back-end with approval | Up to ~56.99% back-end with approval | No hard cap; residual-income based | ~41 to 45% back-end |
| Income limits | None | None | None | Yes (115% of area median) |
| Property location | Anywhere | Anywhere | Anywhere | USDA-eligible areas only |
| Gift funds | Allowed | Allowed | Allowed | Allowed |
| Seller concessions | 3% to 9% (by down payment) | 6% | 4% | 6% |
| Reserves required | Typically none | None | None | None |
| Bankruptcy waiting | Ch. 7: 4 yrs; Ch. 13: 2 yrs from discharge | 2 yrs (Ch. 7); 1 yr into Ch. 13 with on-time history | Same as FHA (2 yr / 1 yr) | 3 yrs from Ch. 7 discharge |
| Foreclosure waiting | 7 yrs (4 yrs short sale or deed-in-lieu) | 3 yrs | 2 yrs | 3 yrs |
| Employment history | 2 yrs (less OK with compensating factors) | 2 yrs, no 6-month gaps | Flexible for transitioning service members | 2 yrs (letter of explanation if not) |
| Assumable | No | Yes (buyer must qualify) | Yes (with lender approval) | Yes (normal qualifying) |
| Non-occupant co-borrower | Allowed | Allowed | Allowed with entitlement | Allowed |
| Owner occupancy | Move in within 60 days | 60 days | 60 days | 60 days |
| Appraisal | Required (waiver possible) | Required | Required | Required |
| Cash-out refi max LTV | 80% | 80% | Up to 100% | Not available |
| Student loan payment used | 0.5% (Freddie) or 1% (Fannie) of balance if no IBR shown | 0.5% of balance | 5% of balance divided by 12 (or deferred 12+ months) | 0.5% of balance |
| Grossing up non-taxable income | 125% | 115% | 125% | 125% |
| Medical collections | Counted per guideline | Excluded | Excluded | Excluded |
The figures above are general program guidelines for education only. They are not a commitment to lend, an offer of credit, or a guarantee of terms. Actual eligibility depends on automated underwriting findings, individual lender overlays, and full underwriting, and program rules change. Loan limits shown are 2026 figures for our NC, SC, and Georgia markets and vary by county. Keith Lopez, NMLS #2814077. NEXA Mortgage, LLC, NMLS #1660690. Equal Housing Opportunity.
Common questions.
What is the lowest down payment I can make?
VA and USDA can be zero down if you qualify. Conventional starts at 3% for first-time buyers, and FHA at 3.5%.
Do I really need 20% down?
No. That is the most common myth in home buying. Every program here lets you put down far less. Twenty percent only matters on conventional loans as the point where mortgage insurance is no longer required.
What credit score do I need to buy?
Conventional generally starts at 620, FHA at 580 for the 3.5%-down option, and VA has no set minimum (though lenders apply their own). USDA looks for 640 for its automated approval. Lower scores can still have a path, so ask before you assume you are out.
What is the difference between FHA and conventional mortgage insurance?
Conventional mortgage insurance is only required under 20% down and cancels automatically as you pay down the loan. FHA mortgage insurance usually stays for the life of the loan unless you put 10% or more down, which is the main reason buyers refinance out of FHA later.
Can the seller help pay my closing costs?
Yes. Sellers can contribute to your closing costs within each program's limit, from 3% to 9% on conventional, 6% on FHA and USDA, and 4% on VA. This is one of the best ways to lower the cash you need at closing.
Which program is best for a first-time buyer?
It depends on your credit, income, savings, and where you are buying. That is exactly the conversation I want to have. Send me your details and I will show you the two or three best fits side by side.
Not sure which one is yours?
Let’s figure it out together. Schedule a free consultation and I will match your situation to the best program, no pressure and no cost.
Not sure which one is yours?
Let's figure it out together. Schedule a free consultation and I will match your situation to the best program, no pressure and no cost.
Keith Lopez, NMLS #2814077 | NEXA Mortgage, LLC, NMLS #1660690 | Licensed in NC, SC & GA | Equal Housing Opportunity