Conventional vs FHA vs VA Loans: Which One Is the Best for You?

Whether you’re a first-time homebuyer or you’re looking at your fourth property, you’re probably wondering what kind of mortgage to take. Most mortgage borrowers can choose from three major loan types: FHA, VA, and conventional. Each loan has a different set of requirements, advantages, and disadvantages, making it imperative to understand what they are and how they can help your situation.

Although most people aim to look for the best mortgage rates in Salt Lake City when buying a home, the truth is that it’s more important to pay attention to the type of loan. While you may have the most advantageous rate around, your loan may have other terms and conditions that may not be compatible with your situation. Here’s how the three loans compare with one another:

The Differences Between Conventional and FHA Loans

Conventional loans are mortgages that don’t have any backing or insurance from the government. They often have fixed interest rates and terms, which means predictable monthly payments. They’re also one of the most popular types of mortgages, and they’re more suitable for borrowers with an exceptional credit score. Still, those with lower credit scores can qualify for conventional loans depending on the financial institution and their circumstances. Credit unions and independent banks often establish more personal relationships with their clients, which means their brokers are more willing to bend the loan rules that big banks strictly follow.

Meanwhile, the FHA loan is offered and insured by the Federal Housing Administration. It doesn’t lend money; instead, it backs qualified lenders if the borrower defaults on the mortgage. Both lenders and borrowers must meet specific criteria to get FHA approval. They also have more flexible lending standards, making them ideal for borrowers with lower credit scores and small down payments. They’re also great for people with mortgages that take a sizeable amount of their monthly take-home pay, allowing them to save a bit more money. FHA loans allow borrowers to allocate up to 57 percent of their income on monthly debt payments like their mortgage, student loans, and credit cards. Meanwhile, the debt-to-income (DTI) ratio for conventional loans is 43 percent.

The Differences Between Conventional and VA Loans

The U.S. Department of Veterans Affairs or VA insures VA loans. Like the FHA, they do not lend money; they insure qualified lenders instead. If the borrower defaults on their VA loans, the lender won’t risk losing any money since the VA protects them. They must also meet certain criteria to qualify for the loan. However, the VA loan isn’t available to just anyone; only veterans, those currently serving, or a member’s spouse can apply for the loan. This loan is extra advantageous to veterans since they can reuse their benefits in the loan.

It’s important to note that the VA doesn’t promise the loan’s full amount, which means the borrowers may have to comply with the lender’s additional requirements. The amount that the VA will guarantee depends on the amount the lender is willing to offer the borrower. 

VA loans don’t require down payments if the borrower uses the mortgage to fund a primary residence. Under this arrangement, borrowers also don’t have to pay mortgage insurance, whereas conventional loans with less than 20 percent downpayment are required. However, borrowers must pay an upfront VA funding fee, which the seller can pay. The amount can also be rolled into the loan, varying from 1.25 percent to 3.3 percent of the loan amount. 

The Differences Between FHA and VA Loans

The government backs both FHA and VA loans. The primary difference is that VA loans are available only to eligible military service members, veterans, and their surviving spouses; ordinary civilians cannot apply. Meanwhile, anyone can apply for an FHA loan as long as they qualify.

FHA loans have lifetime mortgage insurance, while VA loans don’t have any mortgage insurance requirement. If you’re eligible for both VA and FHA loans, you’ll want to compare the two to make sure you get the best mortgage rates possible.


These three types of loans allow prospective homeowners to fund new property, although they each have important differences and similarities that borrowers should consider. By comparing and contrasting the three, you’ll find the best mortgage rates in Salt Lake City.

If you’re looking for a mortgage broker in Salt Lake City, let us know at Frontline Financial! We are a team of mortgage professionals who are proud to serve veterans searching for their dream homes. Apply for a mortgage loan by contacting us today!