Part of the VA loans in Arizona guide, where every rule on this page is cited and dated.
Veterans get steered to FHA and conventional loans constantly, usually by people who have not closed many VA deals. Sometimes that is right. Usually it is not.
Here is the comparison done honestly, including where VA loses.
The structural difference
VA is a guaranty. The Department of Veterans Affairs guarantees part of a loan a private lender makes. You earned it through service.
FHA is insurance. HUD insures the loan, and you pay for that insurance both upfront and annually.
Conventional has no government backing. With less than twenty percent down you carry private mortgage insurance priced on your credit and loan-to-value.
Where VA wins, and it is not close
Down payment.
VA finances with nothing down. FHA requires a minimum down payment. Conventional requires more. For most buyers this is the difference between buying now and buying in three years.
Monthly mortgage insurance.
This is the big one and it compounds. VA charges none. Conventional PMI is cancellable as you build equity. FHA's annual premium, above a certain loan-to-value, runs the life of the loan, and the only exit is refinancing out of FHA entirely.
Over a long hold, a VA borrower and an FHA borrower with identical payments at closing are not in identical positions at all. See How Long You Pay FHA Mortgage Insurance.
Credit flexibility.
The VA publishes no minimum score. Lenders overlay, and the spread between them on VA is wide, so a decline at one bank frequently is not a decline at all. See There Is No VA Credit Score Minimum.
The underwriting test itself.
Residual income is a fundamentally more sensible test than a pure ratio, and it approves files that would fail elsewhere. See Residual Income Explained.
Assumability. VA loans are assumable by qualified buyers. Conventional loans generally are not. In a higher-rate market that is a genuine asset at resale.
Multi-unit with nothing down. VA finances up to four units if you occupy one, with no down payment. Conventional investor financing requires substantial money down. See The Fourplex Play.
Where a veteran should consider something else
I will not pretend these do not exist.
You are putting twenty percent or more down anyway. At that point conventional carries no mortgage insurance either, and using VA costs you a funding fee while consuming entitlement you might want later. Preserving entitlement for a future purchase is a legitimate reason to use conventional today.
You want to keep entitlement available for a specific upcoming purchase. A PCS you can see coming, or a multi-unit plan. Entitlement is finite and spending it has an opportunity cost.
The property will not qualify. Condition items, a project that is not approved, or a property type the program will not finance.
You are buying a second home or an investment property outright. VA is an owner-occupant program.
A competitive situation where the listing agent is prejudiced against VA offers. This should not be a reason and sometimes it is a real one. The fix is usually a fully underwritten approval and a lender who will call the listing agent, not abandoning the better loan. See Pre-Qualified, Pre-Approved, Underwritten.
The comparison to actually ask for
On your numbers, in writing:
- Total monthly payment on each, with the mortgage insurance line shown separately.
- Total cash to close on each, including the VA funding fee or the FHA upfront premium.
- How long the mortgage insurance lasts on each. On VA the answer is none. Make them write that down next to the FHA figure.
- Total cost over the period you will realistically hold the loan, not thirty years.
- What entitlement you consume, and whether that matters for your plans.
Look at lines three and four together. For an eligible veteran with less than twenty percent down, that comparison is rarely close.
The short version
If you have entitlement and you are putting less than twenty percent down, VA is almost certainly your loan. The cases where it is not are real but narrow, and they are about preserving entitlement or about the property, not about the loan being worse.
Anyone steering you away from it should be able to say precisely which of those narrow cases applies to you. If they cannot, get a second opinion.
Why bring a VA file to us
- We quote the rule and the overlay separately. VA sets the floor. Your lender sets what they will actually do. Those are different numbers and only one of them decides your file.
- Broker model. When a lender's overlay is the obstacle rather than VA's rule, the fix is moving the file, not fixing you.
- We do not treat the VA loan as the fallback. No down payment, no monthly mortgage insurance and an assumable note is the strongest financing available to most buyers who have earned it.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending, NMLS #173141, lending in Arizona since 1999 and a 2025 Presidents Club Winner at CMG Home Loans. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
Send me your Certificate of Eligibility, or let me pull it, and I will tell you what your entitlement actually supports.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. The VA home loan program is administered by the U.S. Department of Veterans Affairs; loans are made by private lenders, not by the VA, and this site is not endorsed by or affiliated with the VA or any government agency. Eligibility, entitlement, funding fee amounts and exemptions are determined by the VA based on your service record and disability status. Program requirements are set out in the VA Lenders Handbook and change over time, and individual lenders routinely impose requirements stricter than the VA's published minimums. Any figures shown are illustrative, are not a quote, and are not a projection of investment returns. Rental income, property appreciation and refinancing availability are not guaranteed. Rates, terms and program guidelines change and depend on credit approval, property appraisal and other qualifying factors. Not all applicants will qualify. This is not legal, tax or investment advice.
Looking at a specific home? Send me the address and I will run the numbers: rickykhamis.com/analyze
