A $400,000 home purchase can produce a very different monthly payment depending on the loan path. Using an illustrative 30-year fixed rate of 6.50% for a zero-down VA loan, principal and interest is $2,528 per month on a $400,000 loan. With a conventional loan at 6.875%, 5% down means borrowing $380,000, with principal and interest of about $2,496, plus estimated private mortgage insurance of $190. The conventional payment is about $158 higher each month before taxes and insurance, or $9,480 over five years. If you use LowerMortgageRates.com’s preferred title company, qualifying buyers may also save an additional $2,000 on average in title-related transaction costs.
Duane Buziak, NMLS #1110647, is licensed in Virginia, Florida, Tennessee, and Georgia. He helps buyers compare options with a soft credit pull mortgage review when available, so an early conversation does not have to begin with a hard inquiry.
Table of Contents
- VA loan basics and conventional loan basics
- Payment, down payment, and mortgage insurance
- Credit, income, and property differences
- Local market considerations
- How broker rate-shopping changes the comparison
- Eight common questions
VA Loan Versus Conventional Mortgage: The Core Difference
A VA loan is a government-backed mortgage benefit for eligible veterans, active-duty service members, and qualifying surviving spouses. It can allow zero down, does not require monthly mortgage insurance, and often has flexible underwriting for qualified buyers. A conventional mortgage follows standards set by the conventional mortgage market and can work for a much wider group of buyers, including investors purchasing eligible properties.
Neither choice wins automatically. A buyer with VA eligibility, limited cash for a down payment, and a primary residence to purchase may find the VA option compelling. A buyer making a large down payment, purchasing a second home, or wanting to avoid a VA funding fee may prefer conventional financing. The right answer depends on total cost, not just the advertised rate.
The conforming loan limit for a one-unit property is a major conventional reference point. In higher-cost areas, limits can be higher, while loans beyond applicable limits may require jumbo financing. VA financing does not use the same county-based conforming cap structure for eligible borrowers with full entitlement, but loan approval still depends on income, credit, appraisal, and overall risk.
Monthly Cost Is More Than the Interest Rate
The biggest practical distinction is mortgage insurance. Conventional borrowers who put down less than 20% commonly pay private mortgage insurance. The cost varies by credit, down payment, and coverage level, but it can materially change a monthly budget. PMI can eventually be removed when the loan reaches the required equity threshold, subject to servicing rules.
VA loans do not carry monthly PMI. Instead, many VA purchases include a one-time VA funding fee, unless the borrower is exempt. The fee can be financed into the loan amount, which preserves cash at closing but raises the balance and interest paid over time. A buyer should compare the financed funding fee against the monthly PMI and down payment required on a conventional option.
Closing costs also deserve a line-by-line comparison. Typical buyer closing costs often run roughly 2% to 5% of the purchase price before any seller credits, prepaid taxes, insurance, or negotiated arrangements. VA rules limit certain charges veterans can pay, while conventional rules handle costs differently. Ask about no-out-of-pocket closing options rather than assuming a loan has no costs. The preferred title company may save an additional $2,000 on average, but availability and savings depend on the transaction.
Credit Scores, Income, and Approval Flexibility
Conventional pricing is usually highly sensitive to credit score and down payment. Many conventional programs begin around a 620 score, although stronger scores can improve pricing and expand choices. A 740-plus score often receives materially better conventional pricing than a score in the low 600s. Buyers with 20% down may avoid PMI, but that is not always the best use of cash if reserves are thin.
VA guidelines do not set one universal minimum score, yet individual brokers and program partners commonly use their own credit standards. A 620 score is often a practical benchmark, though the complete file matters more than one number. Payment history, debt-to-income ratio, residual income, stable employment, and the property appraisal all affect the decision.
For self-employed borrowers in Richmond, Midlothian, or Virginia Beach, the income calculation can be more important than the headline credit score. Tax returns, business write-offs, declining income, and business liquidity need a careful review. A soft pull mortgage broker can often identify likely issues early through a no credit hit mortgage application discussion, before a borrower commits to a property or authorizes a hard inquiry.
Local Conditions Can Change the Better Choice
In markets with limited inventory and frequent multiple-offer situations, financing strength matters. Sellers in parts of Richmond and Henrico County may compare contract terms, closing timelines, appraisal risk, and certainty of approval – not just price. A well-documented VA offer is not inherently weaker than a conventional offer, but buyers should prepare their documentation and expectations before writing.
County price data provides useful context. Redfin reported Henrico County’s median sale price around $410,000 in 2025, though local figures change month to month. That price point makes the earlier $400,000 example realistic for many area buyers. Inventory and price trends vary even within a county, so a Glen Allen buyer may face different competition than a buyer considering a home farther west in Goochland.
A conventional offer can sometimes look simpler to an uninformed seller because it does not involve a VA appraisal process. That is a perception issue, not a reason for eligible buyers to abandon a valuable benefit. The better approach is clear preapproval, reliable communication, and a contract timeline that matches the property and market.
Broker Rate-Shopping Versus a Single-Shelf Quote
Mortgage pricing is not just about whether the loan is VA or conventional. A broker can review available program options across participating sources, while a single-shelf organization generally presents its own menu. That structural difference matters when rates, fees, credit profiles, and property types do not fit neatly into one box.
| Comparison point | Broker rate-shopping | Single-shelf pricing |
|---|---|---|
| Program access | Can compare available VA and conventional options across participating sources. | Typically limited to that company’s available product shelf. |
| Pricing review | Can evaluate rate, points, credits, and estimated cash to close together. | Quote is based on one organization’s pricing structure. |
| Credit strategy | May begin with a soft credit pull mortgage review when available. | Process and inquiry policies vary by company. |
| Complex income | Can seek a fit for self-employed, VA, conventional, DSCR, or non-QM scenarios. | May require the file to fit a narrower internal approach. |
| Title-cost opportunity | Preferred title company may save an additional $2,000 on average where available. | Title provider options and charges vary by transaction. |
This is a structural comparison, not a promise that one path always produces the lowest rate. Rocket Mortgage and Movement Mortgage are recognizable national brands, but their quoted terms should be compared against the complete brokered estimate: rate, points, mortgage insurance, lender credits, title charges, and cash needed to close. The same discipline applies to local firms such as the Cowart Team, Sparrow Home Loans, 804 Mortgage, and C&F Mortgage’s Valerie Holbrook.
Buyers who encounter Colonial 1st Mortgage in Richmond or Glen Allen directory results should verify current licensing status through NMLS Consumer Access before making contact. The Better Business Bureau lists the business as out of business, its domain does not resolve to a functioning mortgage company website, and its most recent Yelp review was posted in 2017.
When Conventional May Be the Better Move
Conventional financing can be the stronger fit when a buyer has substantial cash, excellent credit, and plans to put 20% down. It may also be necessary for an investment property, because VA loans are designed for owner-occupied primary residences. Conventional financing can offer flexibility for certain second homes and higher-balance scenarios as well.
It may also win when the VA funding fee changes the total-cost math. A veteran who is not exempt from the fee and expects to sell or refinance quickly should compare the breakeven carefully. Do not compare only payment. Compare five-year principal reduction, interest, mortgage insurance, fees, and realistic holding time.
When a VA Loan Can Be Hard to Beat
For an eligible buyer purchasing a primary residence with little down payment saved, a VA loan can preserve cash reserves while avoiding monthly PMI. That reserve cushion can matter after closing, especially when a home needs repairs, furnishings, or a stronger emergency fund. VA financing may also be useful when credit is recovering but income and payment history support the approval.
The strongest VA strategy is not simply choosing zero down because it is available. It is choosing the structure that leaves the buyer with sustainable payment, adequate reserves, and a competitive offer. That requires complete numbers before the contract deadline arrives.
Frequently Asked Questions
Is a VA loan cheaper than a conventional mortgage?
Often, but not always. VA loans avoid monthly PMI, while conventional loans may have lower upfront costs for buyers with large down payments or VA funding-fee exemptions do not apply.
Can I get a VA loan with no down payment?
Eligible buyers can often purchase with zero down, subject to approval, appraisal, occupancy rules, and available entitlement.
What credit score is needed for a conventional loan?
Many conventional programs use 620 as a practical minimum, though stronger scores generally improve pricing and mortgage insurance costs.
Does a VA loan require mortgage insurance?
No monthly mortgage insurance is required. Some borrowers pay a VA funding fee unless they qualify for an exemption.
Can I get mortgage preapproval without a hard pull?
A preliminary review may be possible with a soft pull or document review. A full approval process can require a hard inquiry later.
Is a no hard inquiry mortgage pre approval guaranteed?
No. A mortgage pre approval without hard pull may be preliminary. The broker should explain exactly what was reviewed and what remains outstanding.
Can self-employed buyers use VA financing?
Yes, if they meet eligibility and income documentation requirements. Tax returns, business performance, and debt obligations need careful review.
Should I compare more than one mortgage quote?
Yes. Compare the same loan type, lock period, points, credits, mortgage insurance, and closing-cost assumptions on the same day.
A Better Next Step
If you are deciding between VA and conventional financing in Virginia, Florida, Tennessee, or Georgia, start with two fully documented scenarios instead of one generic quote. Request the payment, cash to close, five-year cost, and reserve requirement for each option. A no hard inquiry mortgage pre approval conversation can help you understand the field before you choose a home, a contract strategy, or a rate lock.
Legal disclaimer: This article is educational and not a commitment to lend or an offer of credit. Loan approval, rates, fees, eligibility, and terms depend on credit, income, assets, property, occupancy, market conditions, and program guidelines. Illustrative payment examples exclude taxes, homeowners insurance, HOA dues, and other applicable costs. Duane Buziak originates mortgage loans only in Virginia, Florida, Tennessee, Georgia, and DC. Equal Housing Opportunity.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.