What First-Time Buyers Should Know About VA, FHA, and Conventional Loans

Buying your first home is exciting — but choosing the right loan can feel overwhelming. VA, FHA, and Conventional loans are the three most common options, each offering different benefits, requirements, and costs. Understanding how they work can help you save money and choose the loan that fits your budget and goals.

Here’s a clear breakdown of what every first-time buyer needs to know.

1. VA Loans: The Best Option for Veterans and Active Military

Who qualifies?

• Veterans

• Active-duty service members

• Certain National Guard & Reserve members

• Eligible surviving spouses

Why first-time buyers love VA loans:

• 0% down payment

• No mortgage insurance (PMI)

• Competitive, often lower interest rates

• Flexible credit requirements

• Lower closing costs

Things to know:

• You must meet service eligibility requirements.

• The VA charges a funding fee, which can be financed into the loan.

• Homes must pass a VA appraisal to ensure livability and safety.

Best for: Buyers with military benefits who want the lowest upfront cost.

2. FHA Loans: Great for Buyers With Lower Credit or Small Down Payments

Who qualifies?Anyone meeting credit, income, and lending requirements — no military service required.

Why first-time buyers love FHA loans:

• Low down payment: as little as 3.5%

• Lower credit score requirement (typically 580+)

• Flexible debt-to-income limits

• Good for buyers with minimal savings

Things to know:

• Requires mortgage insurance (MIP) upfront and monthly

• MIP can last for the life of the loan unless you refinance

• The home must meet FHA safety and condition standards

• Lower loan limits compared to conventional loans

Best for: Buyers who need more flexibility on credit and down payment.

3. Conventional Loans: Best for Strong Credit and Financial Stability

Who qualifies?Buyers who meet standard lending guidelines for credit, income, and assets.

Why first-time buyers love Conventional loans:

• Down payments as low as 3% for first-time buyers

• PMI can be removed once your equity hits 20%

• Lower long-term costs for buyers with strong credit

• No specific property condition requirements beyond the appraisal

Things to know:

• Typically requires a higher credit score (620–640 minimum, but 740+ gets the best rates)

• PMI cost varies depending on credit score

• Stricter debt-to-income requirements

• Can offer higher loan limits than FHA

Best for: Buyers with solid credit and steady income who want flexibility or plan to remove PMI.

4. Down Payment Comparison

Loan Type	Minimum Down Payment	Monthly Mortgage Insurance	Best For
VA	0%	None	Military / Veterans
FHA	3.5%	Yes (MIP)	Lower credit, limited savings
Conventional	3% (first-time buyers)	Yes (PMI), removable at 20% equity	Good credit, long-term savings

5. Credit Score Requirements

• VA: No official minimum, but lenders prefer 580–620+

• FHA: 580+ for 3.5% down

• Conventional: 620+, but best rates at 740+

Higher credit scores = lower interest rates and lower monthly payments.

6. Appraisal & Property Requirements

VA:

Strict safety and livability standards. The home must be move-in ready.

FHA:

Moderate property condition requirements. Repairs may be required before closing.

Conventional:

Standard appraisal focused mainly on value, not condition.

7. Which Loan Is Right for You?

Here’s a simple guide:

✔ Choose VA if:

You qualify for military benefits and want 0% down with low fees.

✔ Choose FHA if:

You have lower credit, limited savings, or need flexible approval.

✔ Choose Conventional if:

You have good credit and want the best long-term cost, especially PMI removal.

Final Thoughts

Choosing the right loan as a first-time buyer isn't about picking the “best” one — it’s about picking the one that matches your financial situation, credit profile, and long-term goals.

A strong agent and lender can help analyze your budget, estimate your monthly payment, and guide you toward the option that saves you the most money over time.