Conventional wins for good-credit buyers (PMI cancels, no occupancy limit). FHA wins for lower credit or a recent credit event. VA wins for eligible veterans (zero down, no PMI). USDA wins for rural buyers under income limits (zero down). Jumbo is required above the conforming limit. Non-QM serves the self-employed and investors who don't fit conventional rules. The right choice comes down to your credit, down payment, income docs, property use, and loan size — see the master table below.
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The master comparison table
Every major California loan program, side by side on the factors that decide it:
| Program | Min. down | Min. credit | Mortgage insurance | Occupancy | Best for |
|---|---|---|---|---|---|
| Conventional | 3–5% | ~620 | PMI under 20% — cancels | Any | Good credit; 2nd homes & investment |
| FHA | 3.5% | 580 (500 w/ 10%) | MIP — usually for life | Primary | Lower credit; recent credit event |
| VA | 0% | No set min* | None (funding fee) | Primary | Eligible veterans |
| USDA | 0% | ~640 | Guarantee fee | Primary (rural) | Rural buyers under income limits |
| Jumbo | 10–20%+ | ~700+ | Varies | Any | Loans above the conforming limit |
| Non-QM | 10–25% | Varies | Varies | Any | Self-employed; investors (DSCR) |
*VA sets no minimum score, but lenders apply their own. Figures are typical 2026 guidelines and vary by lender.
Conventional vs. FHA
The most common matchup. The short version: conventional for good credit, FHA for lower credit or a recent credit event. Conventional's PMI cancels at 20% equity while FHA's insurance usually lasts the life of the loan, so conventional is typically cheaper long-term for a strong-credit buyer — even when FHA's headline rate looks similar. FHA counters with easier qualifying (down to 580), a higher DTI ceiling, and shorter waiting periods after bankruptcy or foreclosure. We break this down in dollars on the Pros & Cons page.
Conventional vs. VA
If you're an eligible veteran, active-duty service member, or qualifying spouse, VA usually wins outright: zero down payment, no monthly mortgage insurance, and competitive rates — a combination conventional can't match. The main reasons a veteran would still choose conventional are buying a second home or investment property (VA is primary-residence only) or a specific scenario where avoiding the VA funding fee makes sense. For most eligible buyers, check VA first.
Conventional vs. USDA
USDA offers zero down for homes in eligible rural and many suburban areas, for buyers within income limits. Where a property and income qualify, USDA's no-down-payment structure is hard to beat. Conventional wins when the home isn't in a USDA-eligible area, when income exceeds the limit, or when you want a second home or investment property. Much of coastal California falls outside USDA zones, so conventional is the more common fit here — but it's always worth checking eligibility.
Conventional vs. jumbo
This one isn't really a choice — it's set by your loan amount. At or below your county's 2026 conforming limit ($832,750 standard, $1,249,125 high-cost), you're conventional conforming and get standard pricing. Above it, you need a jumbo loan, which carries stricter credit, larger down payments, and reserve requirements. Because California prices push many buyers near the line, structuring your down payment to stay conforming — when it's close — can meaningfully lower your costs.
Conventional vs. non-QM
Conventional verifies income the traditional way — tax returns, W-2s, pay stubs. Non-QM loans use alternative documentation: bank statements for the self-employed, rental income (DSCR) for investors, and more. If your tax returns don't reflect your true cash flow, or you're an investor qualifying on the property itself, non-QM opens doors conventional closes — usually at a somewhat higher rate. Strong W-2 borrowers should stick with conventional; the self-employed and investors should compare both.
Which should you choose? A quick framework
Work down this list — the first "yes" is usually your program:
-
Are you an eligible veteran?
→ Check VA first. Zero down, no PMI is tough to beat.
-
Is the home rural and your income within limits?
→ Check USDA for a zero-down option.
-
Is your loan above the conforming limit?
→ You'll need a jumbo loan.
-
Are you self-employed with write-offs, or an investor?
→ Compare non-QM (bank statement / DSCR) against conventional.
-
Is your credit lower, or is there a recent credit event?
→ FHA is often the easier, cheaper-upfront path.
-
Good credit, standard income, at/under the limit?
→ Conventional is very likely your best fit — cancelable PMI and full flexibility.
Comparison FAQs
Conventional or FHA?
Conventional for good credit (PMI cancels, cheaper long-term); FHA for lower credit, small down, or a recent credit event. See the dollar breakdown on Pros & Cons.
Is conventional better than VA?
For eligible veterans, VA usually wins — zero down, no PMI. Conventional makes sense mainly for a second home or investment property, which VA doesn't cover.
When do I need jumbo?
When your loan exceeds your county's limit ($832,750 standard, $1,249,125 high-cost). At or below is conforming conventional; above needs a jumbo.
Conventional vs non-QM?
Conventional uses tax returns and pay stubs; non-QM uses bank statements or rental income for the self-employed and investors, usually at a higher rate.
How do I pick?
Veterans → VA; rural → USDA; over-limit → jumbo; self-employed/investor → non-QM; lower credit → FHA; good credit → conventional. A broker compares them all for you.
Reviewed by the licensing team at Save Financial, a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766) founded in 2009 and serving all 58 counties from offices in Newport Beach and Marina del Rey.