FHA - VA - Conventional
Three Loans, One Home — and which one builds your future
Conventional, FHA, and VA will all get you into the same house. They ask very different things of you up front, and treat you very differently for the years that follow. Here’s how I think about them.
Written by Sean Williams · Real Estate Broker, Denver Area
When you’re buying a home, the loan isn’t paperwork — it’s the structure your family’s equity gets built on. Three doors are open to most buyers, and choosing between them is one of the most consequential decisions you’ll make before you ever pick up the keys.
To make this real instead of abstract, I’ll walk all three through the same $700,000 purchase, at the same interest rate, so what you’re seeing is the shape of each loan rather than the noise of a moving market. (In the real world, FHA and VA often price a touch lower than conventional — which only strengthens the case I’m about to make.)
Conventional
This is the path I point most buyers toward when their credit and savings can support it — not because it’s the easiest to qualify for, but because it’s the most forgiving over time. Put 5% down and you’re carrying roughly $4,480 a month, with about $277 of that being private mortgage insurance. Here’s the part that matters: that PMI is temporary. Once you’ve built 20% equity, it falls off and your payment drops — and it cancels automatically at 22%. Conventional rewards strength: better credit means a lower PMI rate, and the insurance is never a life sentence. If you can put 20% down, there’s no PMI at all and you start near $3,540 a month.
FHA
This is the door I’m grateful exists, because it opens homeownership to people conventional would turn away — lower credit scores, a thinner savings cushion, a bankruptcy in the rearview. You only need 3.5% down, and that’s real accessibility. But I owe you the honest tradeoff: FHA charges mortgage insurance two ways. There’s a 1.75% upfront premium (about $11,800, rolled into your loan) and a monthly premium of roughly $315, putting you near $4,659 a month. And unlike conventional PMI, on a low-down-payment FHA loan that monthly insurance never goes away on its own. You can build equity for years and still pay it, unless you refinance out. That’s why I treat FHA as a smart entry point with an exit plan — not a forever loan.
VA
For those who’ve earned it, this is simply the best deal in American lending — and I don’t say that lightly. Zero down. No monthly mortgage insurance, ever. On that same $700,000 home you walk in with nothing down and pay around $4,520 a month, with no insurance buried inside it. The one cost is a one-time funding fee (2.15% for first-time use, about $15,000, financed into the loan), and even that vanishes if you’re a veteran with a service-connected disability — which drops you to roughly $4,424 a month on the full amount, with no fee at all. If you qualify for VA, we start the conversation here.
| Conventional 5% down | FHA 3.5% down | VA 0% down | |
|---|---|---|---|
| Cash down | $35,000 | $24,500 | $0 |
| Loan amount | $665,000 | $687,321 | $715,050 |
| Monthly payment | ~$4,480 | ~$4,659 | ~$4,520 |
| After insurance drops | ~$4,203 | needs refi | n/a |
| First-year insurance | ~$3,325 | ~$3,780 | $0 |
| Best fit | Solid credit, shedding PMI | Credit or savings limits | Eligible veterans |
The one thing to carry with you
The cheapest door today and the cheapest door over the next decade aren’t always the same one. FHA gets you in for the least cash, but can quietly cost the most over time. Conventional asks more up front and pays you back by letting the insurance go. And if you’ve served, VA usually beats both without contest.
My job is to make sure you’re choosing with the whole timeline in view — not just the closing table. Let’s find the door that fits the life you’re building.
