There's no single "best" loan — there's the best one for your situation. Quick rules: VA wins if you're an eligible veteran (zero down, no MI). USDA wins for zero down in eligible rural/suburban areas within income limits. Conventional usually wins for good credit (PMI cancels). FHA wins for lower credit, small down, or a recent credit event. Jumbo is for loans above conforming limits; non-QM for self-employed or unique income. This page compares them all. For the deep FHA-vs-conventional decision, see Pros & Cons.
The master comparison
| Program | Min credit* | Min down | Mortgage insurance | Best for |
|---|---|---|---|---|
| FHA | 580 (500 w/10%) | 3.5% | Upfront + often lifetime | Lower credit, small down, recent credit event |
| Conventional | 620 | 3% | PMI, cancels at 20% | Good credit, wants to drop MI |
| VA | No set min | 0% | None (funding fee) | Eligible veterans & service members |
| USDA | 640 typical | 0% | Guarantee fee | Eligible areas, income limits |
| Jumbo | 700+ | 10–20% | Varies | Loans above conforming limit |
| Non-QM | Varies | 10–20%+ | Varies | Self-employed, investors, unique income |
*Program floors; most lenders apply stricter overlays (e.g., ~620–640 on FHA). Figures are 2026 general guidance, not an offer.
FHA head-to-head
FHA vs Conventional
The most common matchup. FHA takes lower credit and prices flatter; conventional rewards good credit and lets you cancel PMI at 20% equity while FHA's insurance often lasts the life of the loan. For 700+ credit, conventional usually costs less over time. For 580–660 or a small down, FHA is often the path in. Full breakdown: FHA Pros & Cons and Conventional.
FHA vs VA
Not close if you're eligible: VA offers zero down and no monthly mortgage insurance, usually at competitive rates. Eligible veterans and service members should compare VA first — it typically beats FHA outright.
FHA vs USDA
USDA offers zero down, but only in eligible areas and within income limits. If your home and income qualify, USDA can beat FHA's 3.5% down. Outside those bounds, FHA is the more flexible low-down option.
FHA vs Jumbo
Different jobs. FHA has county loan limits; above them (and above conforming), you need a jumbo loan, which wants stronger credit and a larger down payment. In many high-cost CA counties, the FHA and conforming ceilings match for 2026.
FHA vs Non-QM
If your income is hard to document the traditional way — self-employed, heavy write-offs — a non-QM loan (like a bank statement loan) may qualify you where FHA's standard income docs fall short, at the cost of a higher rate and down payment.
A simple decision framework
Work down this ladder and stop at the first "yes" — it's usually your strongest option:
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Are you an eligible veteran or service member?
→ VA loan. Zero down, no monthly MI. Hard to beat.
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Is the home in an eligible area and your income under the limit?
→ Consider USDA. Zero down where it fits.
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Is your credit strong (roughly 680+)?
→ Conventional is usually cheaper long-term — PMI cancels.
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Lower credit, small down, or a recent credit event?
→ FHA. The flexible path in, with a planned refinance later.
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Loan above the conforming limit?
→ Jumbo. Stronger credit and a bigger down payment.
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Self-employed or hard-to-document income?
→ Non-QM / bank statement. Qualify on cash flow.
Comparison FAQs
Is FHA or conventional better?
FHA for lower credit or small down; conventional for good credit since PMI cancels. Many use FHA first, then refinance to conventional. See Pros & Cons.
FHA or VA if I'm a veteran?
VA usually wins — zero down, no monthly MI, competitive rates. Eligible veterans should compare VA first.
FHA or USDA?
USDA is zero down but only in eligible areas within income limits. Where it fits, it can beat FHA; otherwise FHA is more flexible.
What if I need more than the FHA limit?
Look at conventional up to the conforming limit, or jumbo above it. In many high-cost CA counties the two limits match for 2026.
How do I choose?
Take the strongest program you qualify for: VA, then USDA, then conventional, then FHA, then non-QM. A broker matches you in one conversation.
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.