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If you’re a service member, veteran, or spouse who qualifies for a VA home loan, you may wonder whether you should automatically buy a home using a VA loan or opt for another type of mortgage, like an FHA loan.
The answer depends on your credit score and financial situation, how much you have for a down payment, the property you’re buying, and other factors.
Learn more: Best mortgage lenders for low or no down payment
In this article:
Who qualifies for VA and FHA loans?
Veterans and military service members have a variety of loan options at their disposal. Depending on their qualifications, they may be able to choose from VA, FHA, USDA, or conventional mortgages to purchase a primary residence. They can also use a VA or conventional loan to buy a second home, but not an FHA loan.
Here’s what you need to know to see if you’re eligible for a VA loan, FHA loan, or both.
Who qualifies for VA home loans?
The VA home loan program is only open to veterans, current military service members, and their spouses. Whether or not you specifically qualify for a VA loan, though, will depend on the time you spent serving in the military — and the minimum amount of time varies based on when you served.
Many people qualify after 90 days of active-duty service. This includes current service members — regardless of branch of service — and veterans who served on or after Aug. 2, 1990 (unless you were discharged for a hardship or a reduction in force). The requirement is typically 181 days if you served between May 8, 1975, and Aug. 1, 1990.
In most cases, you don’t have to meet the requirements for a number of days of active duty service if you have a service-connected disability. For an even more detailed breakdown of service time requirements, check out the U.S. Department of Veterans Affairs eligibility page.
A quick note: National Guard and Reserve members may also be eligible, and spouses of veterans can get a VA loan if their spouse is missing in action or a prisoner of war.
Learn more: What is a VA loan, and what are the requirements to qualify?
Who qualifies for FHA loans?
FHA loans have less strict eligibility requirements. The main limitation is that your home has to be a primary residence, and you must live in it within 60 days after closing on your loan. You also must have a minimum 500 to 580 credit score and a 3.5% to 10% down payment.
There are also requirements for your debt-to-income ratio. While these can vary slightly by lender, the absolute maximum DTI ratio you can have is 57%. This means your monthly debt payments — including your new mortgage payment — take up no more than 57% of your gross monthly income. Some lenders will allow for no more than a 43% DTI.
FHA loans also have set limits based on national and local area home values. For single-unit properties, these range from $524,225 in low-cost areas to over $1.2 million in the costliest markets for 2025. The limits change annually.
Dig deeper: FHA loans — Requirements, limits, and loan types
FHA vs. VA loans: Key differences
Down payments
FHA loans require a 3.5% minimum down payment if your credit score is 580 or higher and a 10% down payment if it is 500 to 579.
VA loans don’t require down payments as long as the loan isn’t for more than the home's value. However, you’re still welcome to put money down if you wish. You might want to do this if you want lower monthly payments or a lower interest rate.
Read more: What is a down payment, and how does it work?
Mortgage insurance
The federal government insures VA and FHA loans, and you must pay a fee to protect the private lender in case you default on payments later. The Department of Veterans Affairs implements a VA funding fee, which you’ll only pay once at closing. You may also choose to roll the fee into your mortgage principal and pay it off as part of your monthly payment.
With FHA loans, you’ll pay an up-front FHA mortgage insurance cost at closing, plus an annual mortgage insurance premium (MIP), which varies yearly based on your loan value. This amount is spread out over your monthly payments and paid off over time.
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Minimum credit score requirements
The Department of Veterans Affairs doesn’t technically have a minimum credit score, but lenders typically require a higher credit score with these loans than with FHA loans.
FHA loans may be issued with a credit score as low as 500 with a 10% down payment or 580 with a 3.5% down payment. VA loan credit scores typically start at 580, though many mortgage lenders require at least 620 or higher.
Read more: The credit score needed to buy a house
Debt-to-income ratios
Your debt-to-income ratio (DTI) is the amount of your monthly debt payments compared to your monthly pre-tax income. For instance, you may have a car loan, credit card, and student loan payments. To determine your DTI ratio, you’d take the total of these — plus your new estimated mortgage payment — and divide it by your monthly income.
The overall debt-to-income ratio you’ll need for an FHA loan can vary quite a bit depending on the FHA lender, credit score, and factors such as energy-efficient home features. FHA DTI ratio requirements tend to range from 43% to as high as 57% in some cases. VA debt-to-income ratios can also vary by lender and start at 41%.
Dig deeper:
Property requirements
With both VA and FHA loans, the home you’re buying must meet certain minimum property standards, ensuring the property is safe for inhabiting and will retain its value over time. There are a lot of requirements, so see the FHA property standards and VA property standards if you want to make sure your home will qualify.
Both loans can also only be used for primary residences — homes you plan to live in within 60 days of closing, and you can purchase homes with one, two, three, or four units (you just have to live in one of them). You can also use VA loans for second homes under certain circumstances.
Learn more: What to know about living and investing in a multifamily home
Mortgage interest rates
FHA and VA loans each come with fixed or adjustable-rate options, meaning you can choose a set interest rate for your entire loan term or a rate that fluctuates over time.
Both FHA and VA interest rates tend to be lower than the rates offered on conventional loans. However, when reviewing your options with mortgage lenders, you should look at the annual percentage rate (APR), not just the interest rate. The APR includes the interest rate and other fees, and it’s a more accurate representation of what you’ll pay on a yearly basis.
Dive deeper: APR vs. interest rate — What to know when mortgage shopping
FHA vs. VA refinancing options
Streamline refinance
Both loan types offer a version of a streamline refinance, which involves refinancing your loan to reduce interest rates or change loan terms. However, unlike with a regular rate-and-term refinance, you don’t need a home appraisal, credit report check, or DTI ratio check for a streamline refinance. This makes it easier to qualify and faster to close.
The VA loan streamline refinance is often called a VA Interest Rate Reduction Refinance Loan (IRRRL). It still charges a VA funding fee, but only a 0.50% fee, unlike a new VA loan, which is 1.25% to 2.15% for your first use.
Fees may vary on FHA Streamline Refinances, but they still have lower closing costs than the initial FHA loan, as you won’t need an appraisal or credit check (both of which come with fees).
Keep learning:
Cash-out refinancing
You can also complete a cash-out refinance with FHA and VA loans. The primary difference between the two is that the VA has a much lower loan-to-value ratio (LTV ratio) requirement for refinancing. With an FHA loan, your LTV ratio needs to be 80% or less, while the VA allows for 100% financing (though many lenders will only allow for up to 90%).
Another way of looking at this is that you need 20% equity in your home for an FHA cash-out refinance and 0% to 10% for a VA cash-out refinance, depending on your mortgage lender.
Dig deeper:
Conventional refinancing
Either mortgage type can be refinanced into a conventional loan, though there’s not much reason to refinance a VA loan into a conventional one — unless you can snag a lower interest rate.
The main reason you would refinance an FHA loan into a conventional one would be to remove FHA mortgage insurance. If you pay down your loan balance to 80% of your home’s value, refinancing into a conventional loan would allow you to avoid paying for mortgage insurance on that new loan, thereby reducing your monthly payment.
Carefully consider refinancing to a different loan type, though — especially with a VA loan. You could lose certain benefits, such as access to a streamline refinancing or loan assumption (a unique benefit of government home loans) later.
Read more: What is an assumable mortgage, and how can you get one?
FHA vs. VA loan FAQs
Is VA more strict than FHA?
VA loans are more strict than FHA loans regarding credit scores and which buyers are eligible. Only military members, veterans, and their spouses can qualify. VA loans don’t require down payments, though, while FHA loans require at least 3.5% to 10% of the purchase price down.
What distinguishes VA loans from FHA and other loans?
VA loans are specifically for military service members, veterans, and some family members. FHA loans are for any U.S. homebuyer that meets the credit and other financial requirements.
Why would a seller not accept an FHA or VA loan?
The general fear of VA loans is a misconception about extra red tape because it’s a government program. Sellers may worry that a home may not meet the program’s strict appraisal requirements or closing could take too long. For FHA loans, the seller may be hesitant because FHA loans have laxer financial requirements (meaning the deal might fall through) or they could take longer to close due to their more complicated home appraisal process.
What is better, a VA loan or an FHA loan?
That depends on your unique situation. If you’re a military member or veteran, a VA loan is likely the better choice, as VA loans are designed specifically with you in mind. They come with low rates and require no down payment at all. FHA loans can be good options for first-time homebuyers. They have low credit score and down payment requirements compared to conventional options.
This article was edited by Laura Grace Tarpley.
