FHA loan vs. VA loan
If you have VA entitlement, the default answer is the VA loan: zero down, no monthly mortgage insurance, competitive rates, and a one-time funding fee that's waived entirely for many disabled veterans. FHA asks 3.5% down and carries mortgage insurance for, typically, the life of the loan.
FHA earns consideration in narrower cases — deeply bruised credit some VA lenders won't price, a co-borrower situation VA rules don't allow, or preserving VA entitlement for another purchase. Self-employed documentation is identical either way: two years of returns.
Side by side
| Factor | FHA loan | VA loan |
|---|---|---|
| Down payment | 3.5% (580+) | 0% |
| Monthly mortgage insurance | Yes — ~0.55%/yr, usually life of loan | None |
| Upfront fee | 1.75% MIP | Funding fee ~1.25–3.3% (waived for many disabled veterans) |
| Who's eligible | Anyone who qualifies | Eligible service members, veterans, surviving spouses |
| Credit flexibility | Deepest | High — VA has no set minimum score (lender overlays apply) |
| Residual income test | No | Yes — adds a cash-flow safety check |
Figures are representative ranges, not quotes, and vary by lender. Read the full guides: FHA loan · VA loan.
Who should pick fha loan
Borrowers without VA entitlement, veterans deliberately preserving entitlement for another property, or files that need FHA's specific credit and co-borrower allowances.
Who should pick va loan
Almost every VA-eligible buyer — the zero-down, no-monthly-insurance structure typically beats FHA's total monthly cost by a wide margin, especially with the funding fee waived.
Bottom line
Still deciding? Take the 5-question loan quiz, compare every option on the loan types page, or size a purchase with the affordability calculator.
FAQ
Yes — the same two-year self-employment standard as other government programs, with VA's residual-income test layered on. A self-employed veteran with thin taxable income faces the same write-off problem as any other borrower, and the same fixes apply.
Yes, and it's a legitimate strategy: buy now with FHA, keep full VA entitlement available for a future purchase — useful when you expect to buy again after a move and want the VA's zero-down power for the more expensive market.
Educational information only — not financial advice, and not a quote, pre-approval, or offer of credit. Mortgage Merlin is a publisher, not a lender or broker.