Understanding Your
Mortgage Options
Your simple roadmap to choosing the right mortgage with total confidence.
Home Loans Explained: VA, FHA, USDA, and Conventional
One of the most confusing parts of buying a home - especially for first-time buyers - is figuring out what kind of loan to get. There are several options, each with different requirements, benefits, and trade-offs. And there are a lot of myths floating around about each of them that cause buyers to either miss out on a great program or assume they qualify for something they don't.
This blog breaks down the four main loan types you'll encounter in the Hampton Roads market in plain language - who each one is for, what it costs, and the most common misconceptions about each. We're starting with VA because in this market, it's the one most buyers should know about first.
VA Loan
The VA loan is a mortgage benefit available to eligible veterans, active duty service members, National Guard and Reserve members, and surviving spouses. It is backed by the U.S. Department of Veterans Affairs and is, in my opinion, one of the best mortgage products available to any buyer anywhere.
In Hampton Roads, VA loans are extremely common. With the density of military bases, veterans, and retirees in this area, a significant portion of all home purchases are financed with VA loans. Any lender and any agent worth working with in this market should know this program inside and out.
My own experience:
I used a VA loan to buy my own home. Zero down payment. The process was straightforward, and the benefits were real. The year after I closed, interest rates dropped and I was able to refinance from around five and a half percent down to four percent - lowering my monthly payment without starting the clock over on a new loan. The VA loan made homeownership accessible when it might not have been otherwise, and the refinance made it even more affordable a year later. For eligible buyers in this market, I genuinely believe it is the best option available.
Key Benefits:
VA Funding Fee required - a one-time fee (typically 1.25% to 3.3% of the loan amount) that can be rolled into the loan. Veterans with a service-connected disability rating may be exempt.
VA appraisal required - the home must meet VA Minimum Property Requirements (MPRs), which means some fixer-uppers may not qualify
Primary residence only - VA loans cannot be used for investment properties or vacation homes
Zero down payment required - you can finance 100% of the purchase price
No Private Mortgage Insurance (PMI) - saves hundreds per month compared to low-down-payment conventional loans
Competitive interest rates - typically at or below conventional rates
Limits on closing costs - sellers can pay certain fees buyers normally cover
Can be used more than once - your entitlement can be restored after paying off a VA loan
Assumable - a future buyer can take over your VA loan, which can be a selling advantage if rates rise
Things to Know:
VA Funding Fee required - a one-time fee (typically 1.25% to 3.3% of the loan amount) that can be rolled into the loan. Veterans with a service-connected disability rating may be exempt.
VA appraisal required - the home must meet VA Minimum Property Requirements (MPRs), which means some fixer-uppers may not qualify
Primary residence only - VA loans cannot be used for investment properties or vacation homes
Who it's for:
Any eligible veteran, active duty service member, or surviving spouse buying a primary residence. If you qualify, this should almost always be your first conversation with a lender.
FHA Loan
The FHA loan is a mortgage backed by the Federal Housing Administration. It was created to help buyers with lower credit scores or smaller down payments access homeownership. It is one of the most common loan types for first-time buyers who do not have VA eligibility.
Key Benefits:
+ Low down payment - as little as 3.5% with a credit score of 580 or above
+ More flexible credit requirements - buyers with scores as low as 500 may qualify with 10% down
+ Gift funds allowed - the entire down payment can come from a family gift
+ Higher debt-to-income ratios accepted - can qualify buyers who wouldn't fit conventional guidelines
Things to Know:
Mortgage Insurance Premium (MIP) required - unlike PMI on conventional loans, FHA MIP stays for the life of the loan if you put less than 10% down. This adds to your monthly cost long-term.
Property condition requirements - FHA appraisers also look at condition, so homes needing significant repairs may not qualify
Loan limits apply - FHA has maximum loan amounts that vary by county. In most of Hampton Roads, the limit is in the mid-$400,000s.
Who it's for:
First-time buyers without VA eligibility who have limited savings or credit scores below conventional thresholds. Also useful for buyers who want a low down payment and don't mind the ongoing mortgage insurance cost.
USDA Loan
The USDA loan is backed by the U.S. Department of Agriculture and is designed for buyers purchasing in eligible rural and suburban areas. Despite the name, it is not just for farms - many suburban communities qualify, including parts of the Hampton Roads area.
Key Benefits:
Zero down payment required - like the VA loan, 100% financing is available
Below-market interest rates - USDA rates are often very competitive
Low mortgage insurance costs - the guarantee fee is typically lower than FHA MIP
Things to Know:
Geographic eligibility required - the property must be in a USDA-eligible area. Parts of Suffolk, Isle of Wight County, and some outer areas of Hampton Roads qualify. Urban areas like Norfolk, Virginia Beach, and Chesapeake generally do not.
Income limits apply - household income cannot exceed 115% of the area median income for your household size
Primary residence only - no investment properties or vacation homes
Who it's for:
Buyers without VA eligibility who are purchasing in a qualifying area and meet the income requirements. Worth checking if you're considering Suffolk, Isle of Wight, or other outer areas of the region.
Conventional Loan
A Conventional Loan is a mortgage that is not backed by a government agency. It is funded by private lenders and typically sold to Fannie Mae or Freddie Mac. Conventional loans have stricter qualification standards than government-backed loans but offer flexibility in terms of loan amounts, property types, and the ability to eliminate mortgage insurance once you reach 20% equity.
Key Benefits:
No upfront funding fee or guarantee fee
PMI can be removed once you reach 20% equity - unlike FHA MIP, you are not stuck with it forever
Available for investment properties and second homes - government-backed loans are limited to primary residences
Higher loan limits - conventional conforming loans go up to over $700,000 in most areas
More property types eligible - conventional loans have fewer property condition restrictions than VA or FHA
Things to Know:
Higher credit score typically required - most lenders want 620 minimum, with best rates at 740+
Stricter debt-to-income requirements - less flexibility than FHA on DTI ratios
PMI required below 20% down - adds monthly cost until you reach 20% equity
Who it's for:
Buyers with strong credit and a larger down payment, repeat buyers with equity from a previous sale, buyers purchasing investment properties or second homes, or buyers whose purchase price exceeds FHA loan limits.
Quick Comparison: Side by Side
⚓ CAPTAIN’S COURSE CORRECTION
Common Misconceptions, Cleared Up
MYTH: VA loans are too complicated and take longer to close.
FACT: VA loans close on similar timelines to conventional loans when handled by an experienced lender. In Hampton Roads, most lenders process VA loans routinely. The key is choosing a lender who does this regularly.
MYTH: You can only use a VA loan once.
FACT: You can use your VA loan benefit multiple times throughout your life. After paying off a VA loan or selling the home, your entitlement is typically restored. In some cases, you can even have two VA loans simultaneously.
MYTH: Sellers won't accept VA loan offers.
FACT: This concern was more common years ago. In Hampton Roads, sellers and listing agents are very familiar with VA loans because they are so prevalent. A well-structured VA offer from a pre-approved buyer with a competitive price is taken seriously. Any agent who tells you otherwise may not know this market well.
MYTH: FHA means you have bad credit.
FACT: FHA loans are used by buyers with a wide range of credit profiles. Many buyers choose FHA specifically for the low down payment, not because they couldn't qualify elsewhere. There is no stigma attached to the loan type
MYTH: USDA loans are only for farms.
FACT: USDA loans are for homes in eligible geographic areas - which includes many suburban communities, not just rural farmland. Eligibility is determined by a USDA mapping tool that is updated periodically. Check the USDA eligibility map for any specific address you're considering.
MYTH: You need 20% down for a conventional loan.
FACT: Conventional loans are available with as little as 3% down through programs like Fannie Mae's HomeReady and Freddie Mac's Home Possible. The 20% threshold matters for avoiding PMI, not for qualifying.
The Bottom Line
The right loan for you depends on your eligibility, your credit profile, your down payment, and the property you're buying. In Hampton Roads, if you have VA eligibility, that conversation should come first - every time. For buyers without VA eligibility, FHA, USDA, and conventional each have their place depending on the circumstances.
The most important thing is to work with a knowledgeable lender who will show you all the options you qualify for - not just the one they prefer to originate. And work with an agent who understands how each loan type affects the offer and negotiation process.
If you'd like help creating a personalized home buying plan for Hampton Roads, book a free consultation at coastalva.chat
About the Author: Marc Ian Griffin, aka Captain Real Estate, is a licensed REALTOR and Wealth Advisor with Coastal VA Estates LLC, powered by Keller Williams Town Center. A retired U.S. Navy veteran, Marc has called the Hampton Roads area home since 1992. He entered real estate in 2006 because he saw what was happening to everyday families who were losing thousands and, in many cases, losing their homes simply because they didn't have the right person guiding them through the potential real estate pitfalls - and he was determined to be that person. After a period away from the industry, he returned in 2025 with that same mission. Marc serves buyers and sellers across Virginia Beach, Norfolk, Chesapeake, Portsmouth, Suffolk, Hampton, and Newport News.
Expertise
Deep market knowledge.
Integrity
Honesty and transparency.
Excellence
Top-notch services.
Expertise
Deep market knowledge.
Integrity
Honesty and transparency.
Excellence
Top-notch services.
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Phone: 757-774-7557
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