VA Loan vs Conventional Mortgage: Which Is Better for Servicemembers?

Congratulations on looking to purchase your new home!

When you’re a military family it can be difficult to determine if you should use a VA Loan or if you should use a conventional loan.

Busting the “Difficult VA Loan” Myth

Oftentimes, real estate agents or mortgage brokers will push you towards a conventional mortgage because they think VA loans come with a mountain of red tape. While years ago that was the case, the VA has aggressively modernized it’s technology to speed up approvals. Right now, VA loans close in a virtually identical timeframe to conventional mortgages which is typically 30–45 days.

PMI v. One Time Fee

Both mortgages have a differing financial structure. A conventional loan is going to charge private mortgage insurance (PMI) when you put less than 20% down on the conventional loan. A simple way to think of this is that you are purchasing an insurance policy each month that doesn’t protect you, but protects the lending company. This insurance varies in cost but typically ranges from 0.5% to 1.5% of your original loan amount annually, which adds roughly $115 to $375 per month to your mortgage payment

On the flip side a VA loan charges a funding fee which is a one-time flat fee. Depending on the amount you put down and if this is your first VA loan will determine what your one-time funding fee is. If this is your first VA Loan, your rate will be 2.15% if you put down less than 5%. If you have used a VA loan before, your rate will be 3.3% if you put down less than 5%. The VA does provide down payment discounts, if you put down between 5% to 9.99% the fee is lowered to 1.5%. If more than 10% is put down, the fee drops to 1.25%.

Let’s look at the numbers. Active duty PCS moves typically last around 4 years. A conventional mortgage of $300 a month is between $360,000 to $515,000. If a service member is paying $300 a month in PMI on a mortgage for those 4 years, that is $14,400 in monthly payments towards PMI. Whereas if this is your first VA Loan, and you don’t put down more than 5%, your mortgage would need to exceed $670,000 before it would exceed the PMI required on a conventional loan.

Recent Changes to Loans

In June of 2026, the VA updated their Minimum Property Requirements to eliminate the outdated appraisal bottlenecks many buyers were facing. This included eliminating radon testing and painting guidelines. This allows VA loans to be more competitive within tight housing markets.

In line with the tight housing market adjustments, the VA now allows servicemembers to pay broker fees directly. This ensures servicemembers aren’t locked out of the top properties simply because of fee rules.

The VA just launched a new program called the Partial Claim program. This will act as a safety net for VA borrowers that if they fall on hard times they have foreclosure protections.

When Conventional Loans Win

VA loans are wonderful for servicemembers looking to purchase a home, but they are not always the right choice. If a servicemember is looking to build a real estate portfolio, they will have to utilize a conventional loan. VA loans only work for primary residences not vacation homes or investment properties.

If you have the ability to put 20% down and have a high credit score (740+), but you’re not exempt from the VA funding fee, in this case a conventional loan might beat out the VA loan because they skip both PMI and the funding fee.

If you have any questions, or want to have a complimentary consultation to create a financial plan. Please don’t hesitate to reach out.