The Big Three: Side-by-Side
| Feature | Conventional | FHA | VA | |---------|-------------|-----|----| | Min. Down Payment | 3-5% | 3.5% | 0% | | Min. Credit Score | 620-680 | 580 (500 w/ 10% down) | 580-620 (lender overlay) | | Mortgage Insurance | PMI (removable at 80% LTV) | MIP (life of loan*) | Funding fee (can be financed) | | Max DTI | 43-50% | 43-50% | 41-60% | | Loan Limits | $766,550 (conforming) | $498,257-$1,149,825 | No limit | | Occupancy | Primary, Second, Investment | Primary only | Primary only | | Best For | 700+ FICO, 5%+ down | First-time, lower FICO | Veterans, active military |
*FHA MIP is removable with 10%+ down after 11 years.
Cost Comparison: $400,000 Home
Conventional (5% down, 720 FICO)
- Down payment: $20,000
- Loan: $380,000
- Rate: ~6.00%
- Monthly P&I: $2,279
- PMI: ~$165/month (removable)
- Total month 1: $2,444
FHA (3.5% down, 640 FICO)
- Down payment: $14,000
- Loan: $386,000 (includes upfront MIP)
- Rate: ~5.75%
- Monthly P&I: $2,252
- Monthly MIP: ~$226/month (not removable*)
- Total month 1: $2,478
VA (0% down, 680 FICO)
- Down payment: $0
- Loan: $409,200 (includes 2.3% funding fee)
- Rate: ~5.50%
- Monthly P&I: $2,323
- Insurance: $0
- Total month 1: $2,323
Decision Framework
Choose Conventional if:
- You have 700+ credit and 5%+ down
- You want to remove mortgage insurance eventually
- You're buying investment or second homes
Choose FHA if:
- You're a first-time buyer with limited savings
- Your credit is 580-680
- You're using gift funds for down payment
Choose VA if:
- You're a veteran, active duty, or eligible surviving spouse
- Period. VA is almost always the best deal for eligible borrowers.
"The right loan isn't always the one with the lowest rate. It's the one that gets you into the right home with payment you can sustain." — Sam Tehranchi, Custom Mortgage Inc.
Custom Mortgage Inc. is licensed in AZ, CA, FL, GA, TX. NMLS #268582.