VA vs Conventional Loans (2026)
Side-by-side 2026 rules for VA-backed and conventional mortgages: funding fee vs PMI, down payment, occupancy, property types, loan limits and who qualifies.
Every item cites an official source (VA.gov, FHFA, Fannie Mae or CFPB) and the date we checked it. Last checked Nov 8, 2026.
Official, in effect Quick comparison
| Topic | VA-backed loan | Conventional (Fannie Mae) |
|---|---|---|
| Down payment | None, if the price isn't above the appraised value | As little as 3% (97% LTV) on a 1-unit home you'll live in, with limits; 5% on 2-4 units |
| Upfront fee / insurance | One-time funding fee (2.15% first use with under 5% down); no monthly mortgage insurance | No upfront fee from the program; PMI usually applies under 20% down |
| Occupancy | Must be your home (primary residence) | Primary home, second home or investment property |
| Loan limit | None with full entitlement; county limit applies with partial entitlement | $832,750 baseline (1 unit), up to $1,249,125 in high-cost areas |
| Who qualifies | Veterans, service members and some surviving spouses with a COE | Any borrower who meets lender and Fannie Mae/Freddie Mac rules |
Sources: VA.gov: Purchase loan · VA.gov: Funding fee · Fannie Mae Eligibility Matrix (Aug 5, 2026) · FHFA: 2026 conforming loan limits · Checked Nov 8, 2026
Official, in effect Funding fee vs PMI
VA: Most borrowers pay a one-time VA funding fee, which can be paid at closing or financed into the loan. For purchase loans (rates effective April 7, 2023): first use is 2.15% with less than 5% down, 1.5% with 5% or more, and 1.25% with 10% or more. After first use, it's 3.3% with less than 5% down. You don't pay it if you receive VA compensation for a service-connected disability, among other exemptions. VA loans have no PMI or MIP.
Conventional: With less than 20% down you usually pay private mortgage insurance (PMI). The CFPB explains that you can ask to cancel PMI when your balance is scheduled to reach 80% of the home's original value. Your servicer generally must end it automatically at 78% if you're current.
Sources: VA.gov: VA funding fee and closing costs · CFPB: What is mortgage insurance? · CFPB: When can I remove PMI? · Checked Nov 8, 2026
Official, in effect Down payment
VA: No down payment as long as the sales price isn't higher than the appraised value. A down payment may be needed if the price is above the VA appraisal or if you don't have enough remaining entitlement.
Conventional: Fannie Mae's Eligibility Matrix (Aug 5, 2026) allows up to 97% LTV on a fixed-rate purchase of a 1-unit principal residence. That's 3% down. Above 95% LTV, at least one borrower must be a first-time home buyer unless the loan is HomeReady or has a Community Seconds. For 2-4 unit principal residences the max is 95%, and for second homes it's 90%.
Sources: VA.gov: Purchase loan · VA lender training: VA loan requirements · Fannie Mae Eligibility Matrix · Checked Nov 8, 2026
Official, in effect Occupancy and property types
VA: You must live in the home. VA's lender training says "reasonable time" generally means moving in within 60 days after closing, with exceptions such as deployment or a set retirement date. A vacation home or investment property doesn't qualify. You can use a VA loan to buy a single-family home with up to 4 units, a condo in a VA-approved project, or a manufactured home, or to build a home.
Conventional: Fannie Mae buys loans on principal residences, second homes and investment properties. For a principal residence, you must move in within 60 days after closing and generally live there for at least one year.
Sources: VA.gov: Purchase loan · VA lender training: VA loan requirements · Fannie Mae Selling Guide B2-1.1-01 · Checked Nov 8, 2026
Official, in effect 2026 loan limits
Conventional: FHFA set the 2026 conforming loan limit for one-unit homes at $832,750 in most of the U.S., and $1,249,125 in high-cost areas.
VA: With full entitlement, VA has no loan limit. Your lender still decides how much you can afford. With partial entitlement, your remaining bonus entitlement is based on the county loan limit, which VA says is the same as FHFA's limit.
Sources: FHFA: 2026 conforming loan limits · VA.gov: Entitlement and loan limits · Checked Nov 8, 2026
Official, in effect Who qualifies
VA: You need a Certificate of Eligibility (COE) based on your service history, plus VA's and your lender's credit and income standards. For example, current service members generally qualify after 90 continuous days of active duty. Veterans who served from Aug 2, 1990 to now generally need 24 continuous months or the full period they were called to active duty (at least 90 days). Exceptions apply. VA has no minimum credit score, but many lenders do.
Conventional: No service requirement. You qualify by meeting your lender's rules and Fannie Mae or Freddie Mac rules for credit, debt and assets.
Sources: VA.gov: Eligibility · VA.gov: Entitlement and loan limits · Fannie Mae Eligibility Matrix · Checked Nov 8, 2026
Quick chooser
- Eligible for VA and have little cash? VA's no-down-payment option and lack of monthly mortgage insurance are hard to beat.
- Have a VA disability rating? You may be exempt from the funding fee, so VA's advantage is even bigger.
- Buying a second home or rental? Only conventional fits, since VA loans are for your primary home.
- Putting 20% or more down? Conventional has no PMI then, so compare rates and costs side by side.
Related tools and pages
FHA vs conventional (2026) · VA funding fee (detail) · Conforming loan limits · Dropping mortgage insurance · Seller concessions by loan type · Cash flow calculator
General information only. Not legal, tax or financial advice. RentToolkit is not a lender, law firm or financial adviser. Mortgage rules change often and lenders can add stricter rules of their own ("overlays"), so confirm with the official source and a licensed loan officer before you act.