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Both FHA and VA loans are government-backed mortgages, but they have different benefits, limitations and eligibility requirements. FHA loans insured by the Federal Housing Administration (FHA) are more widely available and often easier to qualify for. VA loans backed by the Department of Veteran Affairs (VA) offer better benefits, but are only available to eligible military borrowers.
If you're comparing an FHA versus VA loan, the right choice depends on factors including your credit, down payment and whether you qualify for military benefits.
| FHA Loan | VA Loan | |
|---|---|---|
| Loan term | 15-30 years | 15-30 years |
| Maximum loan amount | For 2026: $541,287 in most areas; $1,249,125 in high-cost areas | No limit (with full entitlement) |
| Minimum credit score | Typically 500 to 580, depending on down payment | Typically 620 to 670 |
| Minimum down payment | 3.5% (or 10% if credit score is below 580) | 0% (with full entitlement) |
| Maximum debt-to-income ratio (DTI) | 43% | 41% |
| Interest rates | Usually lower than conventional loans | Often lower than FHA loans |
| Funding fee | None | Typically 1.25%-3.3% |
| Mortgage insurance | Upfront and ongoing mortgage insurance payments | None |
Learn more: FHA Loan Limits
What Is a VA Loan?
A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs and available to eligible service members, military veterans and qualifying spouses or survivors of veterans. VA loans are issued by banks, credit unions and other private lenders.
Eligible borrowers can get VA loans with little or no down payment and no mortgage insurance requirements. Interest rates are often lower than for conventional mortgage loans.
Although the VA doesn't set a minimum credit score, lenders typically prefer borrowers to have a minimum credit score of 620 or more. A DTI of 41% or less is generally required, but higher DTIs may be accepted in some situations.
Eligibility requirements include providing the lender with a certificate of eligibility (COE) based on the time period in which you (or your family member) served in the military. Your COE confirms your VA loan entitlement—the amount the VA guarantees. Your entitlement affects your required down payment. There are two kinds of entitlement:
- Full entitlement is available to most first-time VA borrowers. You can buy a home at any price with no down payment as long as your income and credit qualify you for the loan.
- Second-tier entitlement applies when you've already used some entitlement. You can buy a home at any price, but if your remaining entitlement doesn't cover enough of the loan, a down payment is usually required. Typically, your entitlement plus any down payment must equal at least 25% of the loan amount.
A home purchased with a VA loan must be your primary residence and must be appraised by a VA-approved appraiser to ensure it meets the VA's standards.
Learn more: VA Loan Requirements
What Is an FHA Loan?
An FHA loan is a government-backed mortgage designed for borrowers with lower credit scores or limited funds for down payments. FHA loans are backed by the Federal Housing Administration and issued by private lenders, including banks and credit unions.
Down payments for FHA loans can be as low as 3.5% if you have a credit score of 580 or more. If you have a down payment of 10% or more, you may qualify for an FHA loan with a credit score as low as 500.
Like VA loans, FHA loans can only be used to purchase a primary residence. The home must also meet FHA appraisal standards.
Learn more: How to Qualify for an FHA Loan
Comparing FHA and VA Loans
Here's a comparison of the key requirements and differences between VA and FHA loans.
Eligibility
- FHA loans: FHA loans are open to most borrowers.
- VA loans: VA loans are limited to active-duty service members, veterans and qualifying surviving spouses.
Maximum Loan Amounts
- FHA loans: For 2026, the maximum FHA loan amount is $541,287 in most areas and $1,249,125 in high-cost areas. You can find the exact limits for your location on the HUD FHA Mortgage Limits Page.
- VA loans: There is no official limit on a VA loan if you have full entitlement. If you have partial entitlement and the mortgage amount is greater than your remaining entitlement, you'll have to make a down payment. In most cases, lenders require your remaining entitlement, down payment or the two combined to cover at least 25% of the loan amount.
Credit Score Requirements
- FHA loans: If your down payment is 10% or more, you can get an FHA loan with a credit score as low as 500. If your credit score is 580 or more, you can get an FHA loan with a 3.5% down payment.
- VA loans: Like lenders offering conventional loans, VA lenders can set their own credit scoring requirements, but most prefer good credit (FICO® Scores☉ Θ of 670 or higher), although you may qualify with a score of 620 or more.
Down Payment Requirements
- FHA loans: FHA loans are available with a minimum down payment as low as 3.5% of the home's purchase price, as long as the amount borrowed is within FHA loan limits for your area.
- VA loans: VA loans require no down payment if you have full entitlement. Depending on the home price, you may be required to make a down payment if you have partial entitlement.
DTI Requirements
- FHA loans: FHA loans generally require a DTI of 43% or less.
- VA loans: VA loans typically require a DTI ratio of 41% or less.
Your DTI is the percentage of your monthly pretax income that goes to paying debts. Both FHA and VA loans may sometimes allow higher DTIs if you can compensate with other factors, such as large cash reserves or high credit scores.
Interest Rates
- FHA loans: Interest rates for FHA loans are usually lower than interest rates for conventional mortgages.
- VA loans: VA loans typically offer slightly lower interest rates than FHA loans.
Mortgage Insurance Requirements
- FHA loans: FHA loans require an upfront mortgage insurance premium of 1.75% of your loan, plus a monthly mortgage insurance premium for the life of the loan if your down payment is less than 10%. If your down payment is 10% or more, FHA mortgage insurance can be removed after 11 years.
- VA loans: VA loans don't require mortgage insurance. This is a contrast to conventional mortgages, which require mortgage insurance to protect the lender if your down payment is less than 20%.
Closing Costs
- FHA loans: Closing costs generally range from 2% to 6% of the loan amount. An upfront mortgage insurance premium of 1.75% of the loan is part of your closing costs.
- VA loans: Closing costs are typically 3% to 6% of the loan amount. A VA funding fee, typically 1.25% to 3.3% of your loan amount, is part of your closing costs.
Loan Terms
Both VA loans and FHA loans are available as fixed-rate mortgages and adjustable-rate mortgages. Adjustable-rate VA and FHA loans typically offer attractive interest rates that apply for the first year, but rates can change annually thereafter, making it hard to predict your monthly payments over the life of the loan. VA and FHA loan terms typically range from 15 to 30 years.
Closing Timelines
It usually takes 30 to 60 days to close on a home; according to PenFed Credit Union, the average is 40 to 45 days. VA loans and FHA loans may take a little longer than average to close due to their more stringent appraisal requirements.
Learn more: What Credit Score Do I Need to Buy a House?
Should I Choose an FHA Loan or a VA Loan?
Whether an FHA or VA loan is right for you depends on your eligibility, credit profile and financial situation.
When to Choose a VA Loan
A VA loan might make more sense in the following situations:
- You meet eligibility requirements. Only military service members, veterans and qualifying surviving spouses can get VA loans. You'll need a COE to qualify.
- You have little or no savings for a down payment. VA loans allow you to buy a home with no down payment if you have full entitlement.
- You want to avoid mortgage insurance. Mortgage insurance isn't required for VA loans, which helps reduce your costs.
- You're seeking low interest rates. VA loans typically have lower interest rates than either conventional or FHA loans.
When to Choose an FHA Loan
An FHA loan might be a better bet for you if:
- You're not eligible for a VA loan. You don't have to meet military service requirements to get an FHA loan.
- You have poor credit. An FHA loan may be an option if you have a credit score of 500 or more. Conventional loans that allow low down payments often have stricter credit score requirements.
- You don't need a larger loan. You'll want to make sure FHA loan limits are high enough to afford the home you want.
- You don't qualify for other low-down-payment options. If you don't have much saved for a down payment but your income is higher than programs like Freddie Mac Home Possible or Fannie Mae HomeReady allow, an FHA loan may be an alternative.
- You have minimal funds for closing costs. FHA loans allow you to roll some closing costs (including your upfront mortgage insurance payment) into your loan, which helps reduce the amount due at closing.
Tip: Rolling closing costs into your loan reduces out-of-pocket expenses in the short term. However, because you'll pay interest on these closing costs, your loan will cost more over time.
Learn more: What Type of Mortgage Loan Is Best?
How to Prepare for a Mortgage
Following these steps will help you prepare to take out a mortgage.
- Check your credit. Mortgage lenders often use credit reports from all three consumer credit bureaus (Experian, TransUnion and Equifax). You can get free credit reports from all three credit bureaus at AnnualCreditReport.com. You can also check your credit report and FICO® Score from Experian for free and get insights into how to improve your credit score if necessary.
- Evaluate your DTI. Your DTI is a key factor in mortgage approval. If it's above the maximum for the type of mortgage you're considering, pay down debt to reduce it, even if that means pausing your down payment savings temporarily.
- Set a budget. In addition to your mortgage payments, consider the cost of homeowners insurance, HOA fees and any mortgage insurance required. You can use Experian's mortgage affordability calculator to estimate how much house you can afford.
- Get a COE. If applying for a VA loan, visit the VA website for information on how to request a COE.
- Find lenders. Banks, credit unions and online lenders may offer FHA or VA loans. You can also find FHA-approved lenders on the U.S. Department of Housing and Urban Development (HUD) website and VA-approved lenders through your regional VA loan center.
- Get preapproved. Mortgage preapproval involves submitting your financial information and down payment amount and consenting to a credit check. If preapproved, you'll receive a letter stating your expected loan amount, interest rate, fees and closing costs. Preapproval letters are typically valid for 30 to 90 days.
Learn more: The Complete Guide on How to Get a Mortgage
Frequently Asked Questions
Can You Refinance an FHA Loan?
Yes. FHA borrowers can use a streamline refinance, a cash-out refinance or a rate-and-term refinance into a loan with a new interest rate and term.
Can You Refinance a VA Loan?
Yes. Borrowers can refinance a VA loan into a loan with a lower interest rate loan or convert an adjustable-rate loan to a fixed-rate loan using an interest rate reduction refinance loan (IRRRL), which allows streamlined refinancing. You may also be eligible for a cash-out refinance.
Are FHA Loans Assumable?
Yes, FHA loans are generally assumable if your lender approves it. An assumable mortgage allows a homebuyer to take over the seller's existing mortgage.
How Many Times Can You Use a VA Loan?
You can use a VA loan multiple times, depending on your entitlement. However, you generally can't have two VA loans at once, although there are some exceptions to this rule.
Which Is Better for First-Time Homebuyers, a VA Loan or an FHA Loan?
In most cases, first-time homebuyers are better off with a VA loan, thanks to its low down-payment requirement, low interest rates and lack of a mortgage insurance requirement. However, FHA loans may be easier to get if you have poor credit.
The Bottom Line
Whether you decide to apply for a VA loan, an FHA loan or a conventional mortgage, your credit history is a deciding factor in whether you're approved for the loan. Checking your credit several months before applying for a mortgage can give you time to improve it if necessary.
Free credit monitoring from Experian can help you keep tabs on your score as you prepare to submit your mortgage application. You'll be able to track the progress of your FICO® Score and receive updates on important changes to your credit profile that could impact your score during this critical time.