On FHA vs VA loan, there is rarely a contest. If you have VA entitlement, the VA loan wins almost every time.
Written by Renzo Johnson, Licensed Mortgage Loan Originator · Last updated: August 2026
FHA vs VA loan, side by side
| FHA | VA | |
|---|---|---|
| Down payment | 3.5% | None |
| Mortgage insurance | Runs for the life of the loan at 3.5% down | None, ever |
| Upfront cost | 1.75% added to the balance | Funding fee, waived for disabled veterans |
| Rates | Competitive | Typically lower than FHA |
| DTI | Up to 57% with compensating factors | No formal cap, assessed on residual income |
| Occupancy | Owner-occupied, one to four units | Owner-occupied, one to four units |
Why the VA loan wins
Two differences do the work, and both are large.
The first is mortgage insurance. FHA charges an annual premium that, at the standard down payment, never comes off. VA charges none at all. On a $400,000 loan that difference alone is roughly $180 a month, every month, for as long as you hold the loan.
The second is the down payment. FHA asks 3.5%, which is $14,000 on a $400,000 purchase. VA asks nothing. Therefore a veteran choosing FHA over VA typically pays $14,000 up front and then continues paying for insurance they never needed to buy.
The funding fee is the VA’s offsetting cost, and it is a one-time charge financed into the loan rather than a monthly premium. Veterans receiving VA disability compensation are exempt from it entirely, which removes the only real cost on that side of the comparison.
The narrow cases where FHA still applies
- Investment property. VA financing requires you to occupy the home, so a pure rental purchase needs another program.
- No entitlement available. If your entitlement is fully tied up in an existing VA loan, FHA may be the practical route until you restore it.
- The seller refuses VA. This occasionally happens over appraisal expectations, though it is far less common than agents suggest.
Entitlement is reusable, which surprises people
A VA loan is not a once-in-a-lifetime benefit. Once you sell and repay the loan, your entitlement restores and you can use it again. In some circumstances you can even hold two VA loans at the same time using remaining entitlement.
Since 2020, borrowers with full entitlement also face no VA loan limit, so the benefit reaches further in higher-cost Florida counties than most veterans expect. Read Florida VA loan benefits for the state property tax exemptions that sit on top, or see VA loans in Florida.
Ready to get started?
Get a personalized quote with no obligation. We will help you find the best loan for your situation.
Figures above are illustrative. Sources: US Department of Veterans Affairs loan guaranty rules, including entitlement and loan limits, and HUD Handbook 4000.1. Funding fee amounts vary by service category and prior use.