On a $400,000 Virginia home, an eligible first-use VA buyer putting $0 down could finance a $408,600 loan after a 2.15% funding fee. At a 6.50% fixed rate for 30 years, principal and interest is about $2,583 monthly. An FHA buyer putting 3.5% down would borrow $386,000, finance the 1.75% upfront mortgage insurance premium for a total of $392,755, and pay about $2,482 in principal and interest plus roughly $177 monthly FHA mortgage insurance. That is about $2,659 per month – roughly $76 more than the VA option, or about $4,560 over five years before taxes, insurance, rate changes, and maintenance. That is why VA versus FHA loans is not a simple down-payment comparison.
By Duane Buziak, NMLS #1110647
For a veteran, active-duty service member, or qualifying surviving spouse, VA financing can be one of the strongest paths to ownership in Virginia. FHA remains a valuable alternative for buyers who are not eligible for VA benefits, have a smaller down payment, or need a more flexible credit profile. The right answer comes down to eligibility, monthly payment, cash to close, property condition, and how long you expect to keep the home.
Table of Contents
- VA and FHA loan differences at a glance
- Eligibility, credit, and down payment rules
- Fees and monthly payment trade-offs
- Virginia market context
- Choosing the better fit
- FAQ
VA Versus FHA Loans at a Glance
| Dimension | VA Loan | FHA Loan |
|---|---|---|
| Broker access | Available through approved VA program channels, with broker shopping across qualified options. | Available through FHA-approved program channels, with broker shopping across qualified options. |
| Typical FICO floor | No published universal minimum; many programs commonly look for 580 to 620, depending on the full file. | 500 is the published program floor, but 580 is generally needed for 3.5% down. |
| Down payment | Often 0% for eligible buyers within entitlement and approval guidelines. | 3.5% with a 580+ score; 10% may be required from 500 to 579. |
| Upfront charge | Funding fee, commonly 2.15% for an eligible first-time use with no down payment; exemptions may apply. | 1.75% upfront mortgage insurance premium, typically financed. |
| Monthly mortgage insurance | None. | Required monthly mortgage insurance in most cases. |
| Program breadth | Purchase, refinance, streamlined refinance, and construction options where available. | Purchase, refinance, 203(k) renovation financing, and streamlined refinance options. |
| Pricing flexibility | Often highly competitive for qualified eligible borrowers because there is no monthly mortgage insurance. | Can be a practical approval path, but monthly mortgage insurance affects total payment. |
The table gives the framework, but payment math changes with every file. A VA buyer who is exempt from the funding fee has an even stronger result than the example above. An FHA buyer who brings more than 3.5% down may lower the financed amount, although FHA monthly mortgage insurance can still remain part of the payment for a long period.
Eligibility Is the First Divider
A VA loan is not available merely because a buyer has served at some point. The borrower needs a valid Certificate of Eligibility and must meet service, discharge, or surviving-spouse requirements. Entitlement, prior use of VA financing, and remaining entitlement can affect the maximum structure available.
FHA does not require military eligibility. It is open to owner-occupant buyers who meet credit, income, property, and occupancy standards. That makes FHA especially relevant for first-time buyers in Richmond, Chesterfield, and Virginia Beach who need a lower initial down payment but do not have VA eligibility.
Neither program is designed for a buyer to purchase a primary residence as a pure investment property. Investors considering a rental purchase should instead discuss conventional, DSCR, bank statement, or other non-QM options with a broker. Program fit matters more than chasing one advertised rate.
Credit Standards: Published Rules and Real Approval
FHA is widely known for a 580 score threshold tied to 3.5% down. The published floor can go as low as 500 with 10% down, but a score alone does not approve a mortgage. Late payments, collections, debt-to-income ratio, employment stability, assets, and property appraisal all matter.
VA does not publish one nationwide minimum score. In real underwriting, 580 to 620 is a common working range, but compensating factors can matter. Strong residual income, stable employment, cash reserves, and conservative debts may improve a file. A buyer with a 610 score should not assume FHA automatically wins, and a 700-score buyer should not assume VA is automatically cheapest without comparing the full loan estimate.
Before a buyer starts making offers, a soft credit pull mortgage review can show the likely score range without a hard inquiry. Old Dominion Mortgages offers a no hard inquiry mortgage pre approval conversation through its NoTouch Credit Pull process. It is a mortgage pre approval without hard pull option for early planning, not a final underwriting approval or a promise of financing. A soft pull mortgage broker review is useful when you want to understand your position before submitting a no credit hit mortgage application.
Fees Matter More Than the Headline Rate
VA and FHA both have upfront charges, but their long-term cost structures differ. In the worked example, the VA funding fee added $8,600 to the loan balance. The FHA upfront premium added $6,755. FHA then added about $177 a month in mortgage insurance, which is the key reason its total payment was higher despite borrowing less.
Closing costs in Virginia often run roughly 2% to 5% of the purchase price before any seller contribution, depending on prepaid taxes, homeowners insurance, escrow setup, title work, appraisal, and other transaction details. On a $400,000 purchase, that is approximately $8,000 to $20,000. Ask about no-out-of-pocket closing options when structuring an offer, but understand that credits and pricing adjustments can affect the transaction economics.
In any cost comparison, factor in the title side too. Duane’s preferred title company can save an additional $2,000 on average, subject to transaction details, title requirements, and the services selected. That potential savings should be compared alongside mortgage charges, not treated as a substitute for reviewing the full closing disclosure.
Virginia Price Context Changes the Strategy
Virginia is not one housing market. Redfin reported a Virginia statewide median sale price near $425,000 in mid-2025, while local differences remained substantial. In the same general period, Henrico County’s median sale price was approximately $415,000, Chesterfield County was near $410,000, and Prince William County was near $535,000, based on Redfin market data.
Those figures help explain why financing structure matters. A 3.5% FHA down payment on a $415,000 Henrico County home is $14,525 before closing costs. A qualified VA buyer may preserve that cash for reserves, moving costs, repairs, or a future emergency. In higher-price areas such as Prince William County, preserving cash can be especially meaningful when competition requires appraisal-gap planning or faster decision-making.
The current conforming loan limit baseline in most Virginia counties is $806,500 for a one-unit property in 2025, according to published federal housing finance data. Both VA and FHA have separate county loan-limit mechanics, and FHA limits can be more restrictive in higher-cost areas. A broker should confirm the live county limit before you write an offer in Albemarle, Stafford, or any other Virginia county.
Inventory and buyer competition vary by location. Richmond-area buyers may find more choice than during the tightest recent cycles, but well-priced homes in Short Pump, Midlothian, and Glen Allen can still attract quick offers. In Hampton Roads, VA eligibility is especially common, so a clean preapproval, fast communication, and a realistic appraisal strategy can matter as much as the loan type.
When VA Usually Wins – and When FHA Can Be Smarter
If you are eligible for VA financing, have no funding-fee exemption issue that changes the math, and plan to keep the property long enough for monthly savings to matter, VA is often the first option to evaluate. Zero down, no monthly mortgage insurance, and flexible underwriting features are meaningful advantages.
FHA can be the better route when VA eligibility is unavailable, when the property or entitlement structure makes VA less practical, or when the FHA approval path is cleaner for the specific credit and income profile. FHA 203(k) financing may also be worth evaluating for an owner-occupant home needing eligible renovation work.
Do not stop at VA and FHA. A buyer with 5% or more down, stronger credit, and a conventional-eligible profile may find conventional financing competitive because mortgage insurance can eventually be removed. Self-employed buyers with substantial cash flow but complicated tax returns may need bank statement or non-QM analysis. The best mortgage broker conversation is a side-by-side review of real payment, cash to close, reserve needs, and approval strength.
Frequently Asked Questions
Is a VA loan better than an FHA loan?
For an eligible buyer, VA is often less expensive monthly because it does not require monthly mortgage insurance. FHA can be the better alternative for buyers without VA eligibility.
Can I get a VA loan with no down payment?
Yes, qualified eligible buyers can often finance 100% of the purchase price, subject to appraisal, entitlement, income, and underwriting requirements.
What is the FHA minimum credit score?
FHA permits 3.5% down at 580 or higher and may permit 10% down from 500 to 579. Individual approval standards can be higher.
Does VA require mortgage insurance?
No. VA loans do not have monthly mortgage insurance, though many borrowers pay a one-time funding fee unless exempt.
Can the VA funding fee be financed?
Yes, in many purchase transactions the funding fee can be added to the loan amount rather than paid in cash at closing.
How long does FHA mortgage insurance last?
With less than 10% down, FHA monthly mortgage insurance generally lasts for the life of the loan. With 10% or more down, it generally lasts 11 years.
Can I use a soft credit pull before applying?
Yes. A soft credit review can help you plan without a hard inquiry. Final approval still requires full documentation, underwriting, and a complete credit review.
Can a seller help with closing costs on VA or FHA?
Yes, seller concessions may be permitted within program rules. The exact amount and permitted uses depend on the loan program and contract structure.
Legal disclaimer: This material is for educational purposes only and is not a commitment to extend credit or a guarantee of approval. Rates, payments, fees, eligibility rules, county limits, and program guidelines can change. Payment examples exclude property taxes, homeowners insurance, homeowners association dues, and other possible costs. All mortgage applications are subject to credit, income, asset, appraisal, title, occupancy, and underwriting review.
A strong offer starts with knowing the payment you can live with, not just the maximum amount you can qualify to borrow. Get the numbers early, protect your credit while planning, and choose the program that supports your next five years – not just closing day.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.
