FHA vs conventional for a first-time buyer
The shortest honest version: FHA forgives credit, conventional rewards it. FHA takes a 580+ score at 3.5% down, per HUD; conventional wants stronger credit but lets its mortgage insurance cancel.
Most first-time buyer decisions come down to this pair, and the deciding factor is usually the mortgage insurance math over your expected hold, not the down payment difference. I keep the full head-to-head, costs and crossover points included, in the FHA vs conventional guide; this page won't rebuild it. What I'll add from the first-timer seat: buyers with a recent credit event usually land FHA, buyers with clean credit and thin savings usually price out conventional first, and the answer flips often enough that running both is the only honest method.
When is VA the best option?
Almost always worth pricing first if you're eligible: $0 (full entitlement) down and none (no monthly pmi); one-time funding fee instead, per VA.gov, a combination no other program matches.
VA's edge for first-time buyers is cash preservation: nothing down, no monthly mortgage insurance, and a one-time funding fee that can be financed (or waived entirely with a qualifying disability rating). The catch is simply eligibility, which runs on service history. If that might be you, start at the VA loan guide and check eligibility before assuming anything; veterans skip this benefit out of misinformation distressingly often.
When is USDA the best option?
When you're buying in an eligible rural or outer-suburban area within USDA's income limits: it's the other $0-down program, per USDA Rural Development.
USDA surprises people with how much territory counts as "rural"; plenty of commutable small towns qualify. It carries its own guarantee fee structure (1% upfront plus 0.35% a year, per USDA Rural Development) instead of mortgage insurance, plus an area test and a household income cap. The full mechanics live in my USDA loan guide, with the two gates broken out in property eligibility and income limits.
What are the lowest down payment options, compared?
$0 for eligible VA and USDA borrowers, about 3% for conventional first-timer programs, 3.5% for FHA, per the agencies' published guidelines.
Attribute the zeros correctly: "$0 down" belongs to VA and USDA eligibility, not to mortgages generally. And the down payment is only part of the cash story; closing costs ride along whatever you choose, and state assistance can offset either. The cash-to-close comparison across programs, which is the number that actually decides feasibility, runs through the hub's down payment section and its dedicated guide.
Not sure which of these fits you? The 60-second loan matcher gives you a general read.
Which loan fits me?How does credit score steer the choice?
Lower scores point to FHA, whose HUD floor is 580 for the low down payment; stronger scores open conventional pricing; VA sets no minimum at all, per VA Pamphlet 26-7, though lender overlays apply everywhere.
The mechanism worth understanding: conventional pricing is risk-based, so the rate and PMI cost climb as scores drop, while FHA's government insurance keeps its pricing flatter across the credit range. That's why there's usually a credit crossover point where the better deal flips from conventional to FHA. Where that point sits varies by market and lender; the FHA credit guide covers the FHA side in depth, and the conventional credit guide covers the 620 floor and risk-based pricing.
How does the mortgage insurance differ?
The structural difference: low-down FHA MIP runs for the life of the loan, per HUD, while conventional PMI can cancel as equity grows under the Homeowners Protection Act; VA charges no monthly mortgage insurance at all.
For a first-time buyer this is the long-game variable. FHA's easier entry trades into a premium that doesn't leave on its own (the standard exit is refinancing to conventional later), while conventional's stricter entry buys an insurance cost with an expiration date. The numbers live where they belong: FHA MIP guide for the grid and durations, the conventional PMI guide for the cancellation rules. Decide on the total cost over your realistic hold, not the sticker down payment.