I hear this question all the time:

“Is a VA loan better than a conventional loan?”

Wrong question.

The right question is:

“Which loan makes more sense for this borrower, buying this house, with this amount of money, right now?”

I've closed more than 500 VA loans, and I'm a huge believer in the VA benefit.

But that doesn't mean I'm going to tell every eligible Veteran to blindly use a VA loan.

That's not mortgage strategy.

That's just selling a product.

Run the damn numbers.

THE BIGGEST DIFFERENCE: DOWN PAYMENT

One of the biggest advantages of a VA loan is simple:

Eligible borrowers may be able to purchase with no down payment.

That can be a massive advantage.

But zero down doesn't mean you should automatically put zero down.

Maybe keeping $50,000 in the bank makes more sense.

Maybe putting money down creates a payment you're more comfortable with.

Maybe conventional financing prices better in your particular scenario.

The goal isn't to put the least amount of money down.

The goal is to structure the mortgage correctly.

WHAT ABOUT CONVENTIONAL DOWN PAYMENTS?

Here's another myth:

“Conventional loans require 20% down.”

No, they don't.

There are conventional loan programs that allow substantially less than 20% down.

The reason people talk about 20% so much is because conventional borrowers who put less than 20% down will commonly have private mortgage insurance, or PMI.

That changes the monthly-payment comparison.

So don't compare:

VA rate vs. conventional rate.

Compare:

VA total payment vs. conventional total payment.

That's a much more useful number.

VA DOESN'T HAVE MONTHLY MORTGAGE INSURANCE

This is one of the most important differences between the programs.

VA-backed purchase loans do not require monthly mortgage insurance.

A conventional borrower putting less than 20% down may be required to pay PMI.

How much?

That depends on the conventional loan, credit profile, down payment and other factors.

And conventional PMI isn't necessarily permanent. Depending on the loan and circumstances, it may eventually be canceled.

But while you're paying it, it's part of your monthly housing expense.

Don't ignore it when comparing loans.

BUT VA MAY HAVE A FUNDING FEE

Here's the other side.

Many VA borrowers pay a VA funding fee.

It's generally a one-time charge, and the amount can depend on factors including whether you've used the VA benefit before and how much you're putting down.

The funding fee can generally be paid at closing or financed into the VA loan.

But not everybody pays it.

Certain eligible Veterans, service members and surviving spouses are exempt.

That exemption can materially change the VA-versus-conventional comparison.

If you're exempt from the funding fee, I damn sure want to know that before comparing your options.

DON'T COMPARE INTEREST RATES BY THEMSELVES

This drives me nuts.

Someone says:

“Conventional is 6.25% and VA is 6.00%, so VA is better.”

Maybe.

But I don't know enough yet.

What are the points?

What are the lender credits?

What's the PMI?

What's the funding fee?

How much are you putting down?

What's the actual loan amount?

How long do you expect to own the home?

What's the monthly payment?

What's the cash required to close?

The rate is one number.

The mortgage is the entire equation.

COMPARE CASH TO CLOSE

Let's say you have $60,000 available.

Just because you can put $60,000 into the house doesn't mean you necessarily should.

Maybe VA financing allows you to keep substantially more cash in reserves.

That money might be useful for:

Emergency savings.

Repairs.

Furniture.

Investments.

Paying off other debt.

Or simply sleeping better at night because you didn't empty your damn bank account to buy a house.

On the other hand, putting more money down may lower the payment and borrowing costs.

There isn't one correct answer for everybody.

COMPARE THE ACTUAL MONTHLY PAYMENT

This is where the conversation gets useful.

Let's say we're comparing two legitimate options.

I want to see:

Principal and interest.

Property taxes.

Homeowners insurance.

Mortgage insurance, if applicable.

HOA, if applicable.

And anything else affecting the actual housing expense.

Then show me the cash required to close.

Now we're comparing loans.

A rate without the rest of the numbers is just marketing.

CREDIT CAN CHANGE THE CONVERSATION

Conventional loan pricing can be heavily affected by a borrower's credit profile and other risk factors.

That doesn't automatically mean VA financing will always be cheaper.

It means you need to price both options using the borrower's actual situation.

A borrower with excellent credit and a significant down payment may see a very different comparison than a borrower with limited cash available.

This is why generic internet advice only gets you so far.

Your mortgage needs to be priced around you.

WHAT ABOUT THE VA APPRAISAL?

Here's where conventional financing sometimes gets presented as automatically easier.

“Just go conventional so you don't have to deal with the VA appraisal.”

That's lazy.

VA appraisals have specific requirements.

That doesn't make every VA transaction difficult.

We covered VA appraisals in detail in another article, including Minimum Property Requirements, Tidewater and Reconsideration of Value.

If the property has a legitimate issue that affects VA financing, we deal with it.

But don't throw away a potentially valuable loan benefit because somebody is scared of an appraisal.

WHAT ABOUT SELLER ACCEPTANCE?

Another one I hear:

“Sellers don't like VA offers.”

Some sellers and agents may have concerns about VA financing.

Sometimes those concerns come from experience.

Sometimes they come from outdated information.

And sometimes they come from somebody who simply doesn't understand VA loans.

The answer isn't to pretend differences don't exist.

The answer is to make the offer strong.

Have a legitimate preapproval.

Use a lender who understands VA.

Communicate.

Know the appraisal process.

Know the borrower.

And solve problems before they become problems.

WHEN MIGHT VA MAKE MORE SENSE?

VA financing may deserve a very serious look when you're eligible and things like these matter:

Keeping more cash instead of making a large down payment.

Avoiding monthly mortgage insurance.

Using the VA benefit you've earned.

Structuring the lowest sensible total housing expense.

But eligibility alone doesn't make the decision for you.

Run the comparison.

WHEN MIGHT CONVENTIONAL MAKE MORE SENSE?

There are absolutely situations where conventional financing deserves consideration.

Maybe you're making a substantial down payment.

Maybe the conventional pricing is extremely competitive.

Maybe PMI is minimal or nonexistent.

Maybe the property or transaction works more cleanly with conventional financing.

Maybe your longer-term financial strategy points in that direction.

Again:

Run the damn numbers.

The loan program should fit the borrower.

The borrower shouldn't be forced into the loan program.

STOP ASKING WHICH LOAN HAS THE LOWEST RATE

Ask better questions.

How much cash do I need at closing?

What's my total monthly payment?

Am I paying mortgage insurance?

Do I owe a VA funding fee?

What does each loan cost over the time I realistically expect to keep it?

How much money am I keeping in the bank?

What risks or restrictions matter for this property?

Now we're talking about mortgage strategy.

THE BOTTOM LINE

VA versus conventional isn't a popularity contest.

And there isn't one answer that works for every Veteran.

VA financing can provide some incredible advantages.

No required down payment for eligible borrowers.

No monthly mortgage insurance.

Flexibility that can be extremely valuable when used correctly.

But conventional financing can also make sense depending on your credit, equity, down payment, property and overall financial strategy.

Don't choose a mortgage because somebody told you:

“VA is always better.”

And don't give up your VA benefit because somebody told you:

“Conventional is easier.”

Put the options next to each other.

Compare the payment.

Compare the cash.

Compare the costs.

Then make the decision.

WANT ME TO COMPARE BOTH OPTIONS?

Eligible for a VA loan but wondering whether conventional might make more sense?

Already have quotes from another lender?

Perfect.

Send me the numbers.

I'll compare the options and tell you what each one actually costs.

No bullshit.

Just the math.