FHA, VA, USDA or conventional: which loan fits which buyer

The four common home loans differ in one thing first: who stands behind the loan if the borrower stops paying. That single fact sets the down payment, the mortgage insurance, and who is allowed to use each one. A conventional loan has no government program behind it, and many are sold to Fannie Mae or Freddie Mac; put down less than 20 percent and the lender will usually require private mortgage insurance. An FHA loan is insured by the Federal Housing Administration, part of HUD, which is why it allows a small down payment and a lower credit score, and why mortgage insurance is required on every one. A VA loan is partly guaranteed by the Department of Veterans Affairs for veterans, service members and some surviving spouses, usually with no down payment and no monthly mortgage insurance. A USDA loan is for homes in areas the Department of Agriculture classes as rural, with an income limit and no down payment. In every case a private lender makes the loan and decides whether you qualify.

We are agents, not lenders, and nothing here is lending advice. The Consumer Financial Protection Bureau's loan options page gives the right instruction: if more than one option fits, ask lenders for several quotes and see which type offers the best deal overall. Our preferred lender is listed with the team's referrals.

What is the difference between FHA, VA, USDA and conventional loans?

A conventional loan is one the CFPB describes as not part of a specific government program. Conforming loans, the common kind, stay under a government-set maximum amount and are backed by Fannie Mae or Freddie Mac. Fannie Mae's own page on what it does says it does not originate loans or lend money directly; it purchases mortgage loans made by lenders. Your bank writes the loan to sell it, so the loan follows the buyer's rulebook.

An FHA loan is a federal insurance policy on top of a lender's loan. HUD's page on its basic 203(b) program says the loan is funded by a lending institution and the mortgage is insured by HUD; the borrower must meet standard FHA credit qualifications, can finance the upfront mortgage insurance premium into the mortgage, and pays an annual premium as well. A VA loan swaps insurance for a guarantee: VA's loan types page says VA guarantees a portion of the loan you get from a private lender. VA is not your lender.

A USDA loan is the one most Upstate buyers have never priced. The CFPB's special loan programs page describes it as a loan for low- and moderate-income borrowers in rural areas, with zero down payment, an upfront fee, and ongoing mortgage insurance premiums paid to USDA. Somebody always pays for the risk the lender is not carrying, and on all four loans that somebody is you.

Is an FHA loan or a conventional loan cheaper?

Neither, on its own. The CFPB's FHA page, read September 2026, says that for borrowers with lower credit scores or a smaller down payment, FHA loans can often be the cheapest option; they allow down payments as low as 3.5 percent and lower credit scores than most conventional loans. The same page says that for borrowers with good credit and a medium down payment, which it puts at 10 to 15 percent, FHA loans tend to be more expensive, because mortgage insurance is required for all FHA loans.

Private mortgage insurance decides most of this. The CFPB defines it as insurance you might be required to buy on a conventional loan with a down payment of less than 20 percent of the purchase price, and it is blunt about who it is for: PMI protects the lender, not you. Twenty percent is not the conventional minimum, though. Freddie Mac's Home Possible page describes a 3 percent down payment for borrowers whose qualifying income is at or under 80 percent of the area median, and says the mortgage insurance on a one-unit property can be cancelled after the loan balance drops below 80 percent of the home's appraised value, once the cancellation criteria are met. That cancellation is the structural difference between the two loans, and only a lender can price it on your file.

Who qualifies for a VA home loan?

Veterans, current service members and some surviving spouses who meet VA's service requirements, which you prove with a Certificate of Eligibility. VA's eligibility page sets the minimum active-duty time era by era, with separate rules for the National Guard and the Reserve; read your own era there rather than any summary. Surviving spouses qualify in narrower cases, including some who receive Dependency and Indemnity Compensation.

What the loan gives you is on VA's purchase loan page: no down payment as long as the sales price is not higher than the home's appraised value, no private mortgage insurance and no mortgage insurance premiums, fewer closing costs, some of which the seller may pay, and no penalty for paying the loan off early. VA's home loans page says nearly 90 percent of VA-backed loans are made with no down payment.

The honest part is the funding fee. VA's funding fee page calls it a one-time payment the veteran, service member or survivor pays on a VA-backed loan. It changes with the loan amount, whether it is your first use and the size of your down payment, and it can be financed into the loan or paid at closing. Some borrowers are exempt, including those receiving VA compensation for a service-connected disability. The rest pay it, and it is real money that a "no down payment" headline hides. A private lender still approves your credit and income, and you have to intend to live in the house. Tom Canny on our team is a Marine Corps veteran who works with buyers.

Can you get a USDA loan near Greenville, SC?

Only for an address that USDA Rural Development's eligibility map places in an eligible rural area, and only if household income is under the program's limit for that area. The USDA eligibility site lets you type in a property address and see whether it sits in an eligible area, and check household income against the program's limits. The site says it evaluates the likelihood that an applicant would be eligible; the lender and USDA make the final call.

The map works by street address, not by county or town: a house on one side of a road can qualify while the next road over does not, and the lines can change. Downtown Greenville is not what the program exists for. Whether a specific address in Greenville, Anderson, Pickens, Spartanburg or Laurens County qualifies is a lookup, not a guess, and it takes a minute to run.

Can you use down payment assistance with an FHA or conventional loan?

Often, yes. The CFPB's special loan programs page says many state and local programs offer down payment assistance that can be used with a regular FHA or conventional loan, that some lend money directly through subsidized loans, and that many focus on low- and moderate-income families buying their first home, though some are open to people who have owned before. In South Carolina the state program is SC Housing's, and it is not a standalone grant: the assistance is a second mortgage that rides on the authority's own first mortgage, and only a lender on its approved list can originate it. We wrote that sequence up in SC Housing down payment assistance, step by step.

Which loan fits which buyer?

Read plainly, the four sort themselves. A veteran or service member with a Certificate of Eligibility should have a lender price the VA loan first, because no down payment and no monthly mortgage insurance is hard for the others to beat. A buyer with modest savings and a thin or bruised credit file should have FHA priced against a low-down conventional loan like Home Possible, and let the total cost decide. A buyer whose address passes the USDA map and whose income is under the limit should ask for that quote too, because most lenders will not offer it unprompted. A buyer with good credit and a medium or large down payment will usually land on a conventional loan.

One more cost no fee sheet shows. Some Greenville listing agents read the loan type on an offer and assume a government-backed loan will close slower than a conventional one. It is not always true, and a lender who calls the listing agent before the offer goes in fixes most of it. But it is part of the price of the loan. The buyer walkthrough shows where the loan decision sits in the rest of the process.