Home › USDA vs FHA vs Conventional vs VA Loan Comparison
USDA vs FHA vs Conventional vs VA Loan Comparison
The four low-down-payment loans, side by side on the same house. USDA: 0% down, 1% upfront, 0.35% annual. FHA: 3.5% down, 1.75% upfront (UFMIP), 0.55% annual MIP. Conventional: 3% down with PMI. VA: 0% down, 2.15% funding fee, no monthly fee.
FY2027 fee schedule (1% upfront, 0.35% annual, 1 Oct 2026 – 30 Sep 2027), checked against USDA Rural Development program terms, November 2026. Last updated 13 November 2026. Estimates only — not a lender, and not affiliated with the U.S. Department of Agriculture.
Compare USDA, FHA, conventional and VA loans
| USDA loan | FHA loan | Conventional | VA loan | |
|---|---|---|---|---|
| Down payment | $0 | $0 | $0 | $0 |
| Upfront fee | $0 | $0 | $0 | $0 |
| Total loan amount (fee financed) | $0 | $0 | $0 | $0 |
| Monthly principal & interest | $0 | $0 | $0 | $0 |
| Monthly insurance fee / PMI (year 1) | $0 | $0 | $0 | $0 |
| Monthly total (P&I + fee) | $0 | $0 | $0 | $0 |
| Fees paid in first 5 years | $0 | $0 | $0 | $0 |
| Monthly fee ever cancels? | No — life of loan | No at 3.5% down — life of loan | Yes — at 20% equity | No monthly fee at all |
| Income / area limits | 115% of AMI · rural areas only | None | None | Military service · no income limit |
The USDA annual fee never cancels. Some comparison tables wrongly say the USDA fee drops off at 80% loan-to-value — that is conventional PMI, not the USDA fee. The USDA 0.35% annual fee runs for the life of the loan; only refinancing into a conventional loan removes it. FHA’s annual MIP also runs for the life of the loan at 3.5% down (it can end after 11 years only with 10%+ down).
Taxes and insurance are identical on all four loans, so they are left out here — add them in the main USDA calculator. Conventional PMI is estimated at 0.50% a year here (actual PMI depends on your credit score and down payment, typically 0.3–1.5%); the VA funding fee is 2.15% for first use at 0% down, and veterans with a service-connected disability are exempt.
How the Comparison Works
- Same house, same rate, 30-year term on all four. Only the program rules differ, so the difference you see is the programs’, not the market’s.
- USDA: 0% down, 1% upfront guarantee fee financed into the loan, 0.35% annual fee on the balance — FY2027 schedule.
- FHA: 3.5% down, 1.75% upfront mortgage insurance premium (UFMIP) financed, 0.55% annual MIP on the balance (HUD Mortgagee Letter 2023-05).
- Conventional: 3% down (a typical first-time-buyer minimum), no upfront fee, private mortgage insurance estimated at 0.50% a year on the balance. Real PMI varies with credit score and down payment (typically 0.3–1.5%) and cancels once you reach 20% equity — the only monthly fee in this table that does.
- VA: 0% down for eligible veterans and service members, a 2.15% one-time funding fee for first use financed into the loan, and no monthly insurance fee at all. Veterans receiving VA disability compensation are exempt from the funding fee.
- What is left out: property tax and homeowners insurance are identical on all four loans, so they are excluded here. The monthly totals are principal & interest plus the insurance fee in year one — add taxes and insurance in the main calculator for the full payment.
- The trade-off: USDA needs no cash down and has the lowest fees of the four — but only if your income is under the 115% cap and the home is in an eligible area. VA beats it for eligible veterans (no monthly fee). FHA has no income or area limits and accepts lower credit scores; conventional is the route out — refinance into it at 20% equity and the monthly fee disappears.
Sources. USDA Rural Development guarantee fee schedule (FY2027); HUD FHA mortgage insurance schedule (Mortgagee Letter 2023-05); VA funding fee schedule for 2026 (2.15% first use at 0% down, 3.30% subsequent use; disability exemption); conventional PMI estimated at 0.50% — an assumption, not a quoted rate. Checked November 2026.
Sources
Official sources for the figures on this page. If a number here ever disagrees with one of these pages, the official source is correct.
- USDA Rural Development — Single Family Housing Guaranteed Loan Program (program rules, guarantee fees, income limits).
- USDA Income and Property Eligibility Site — the official eligibility map: enter an address to check the property, and a state and county to check income limits.
- USDA income limits tool — look up the income limit for your state and county (cited in HB-1-3555, Chapter 9).
- USDA Handbook HB-1-3555 — the Single Family Housing Guaranteed Loan Program handbook for lenders (PDF).
- 7 CFR 3555.107 — guarantee fee — the regulation behind the upfront and annual fees.
- Consumer Financial Protection Bureau — How to review your Loan Estimate.
Frequently Asked Questions
Which loan is better for a low credit score?
FHA. USDA lenders typically want a 640 credit score for streamlined approval through the automated GUS system. FHA approves lower scores — 580 for a 3.5% down payment loan.
Can I refinance from FHA to USDA?
Yes, if the home sits in an eligible rural area and your household income is under the 115% cap. A USDA refinance can remove FHA’s higher 0.55% annual mortgage insurance premium — run the numbers in the refinance calculator.
Do both loans require mortgage insurance?
Both charge a fee instead of PMI: USDA 1% upfront plus 0.35% a year; FHA 1.75% upfront plus 0.55% a year. On the same loan USDA’s fees are lower — but FHA has no income limit and no rural-area restriction.
When does conventional PMI cancel — and does the USDA fee ever cancel?
Conventional PMI cancels once you reach 20% equity (80% loan-to-value), and drops automatically at 78% of the original value. The USDA annual fee never cancels while the USDA loan is outstanding — only refinancing into a conventional loan removes it. FHA’s annual MIP also runs for the life of the loan when you put less than 10% down.
Can the VA funding fee be waived?
Yes. Veterans receiving VA compensation for a service-connected disability, Purple Heart recipients on active duty, and qualifying surviving spouses pay no funding fee at all — which makes a VA loan cheaper than USDA for eligible borrowers. Everyone else pays 2.15% on first use at 0% down (3.30% on later uses).
More USDA Loan Tools
One topic, six tools — each answering a different question in the USDA loan journey.