FHA vs USDA vs VA loans: which one fits your situation?

Pick a U.S. Department of Agriculture (USDA) loan over a Federal Housing Administration (FHA) loan if the home is rural and your household earns under USDA's income limit. An income limit is the most a household can earn and still qualify. USDA needs no down payment; FHA needs 3.5% down and fits most other buyers. If you served in the military, look first at a U.S. Department of Veterans Affairs (VA) loan, which needs no down payment either.

How do FHA, USDA and VA loans compare?

All three are government-backed home loans you get from a private lender. The Federal Housing Administration is part of the U.S. Department of Housing and Urban Development (HUD), the federal housing department, which sets the rules for FHA loans.

FHA insures its loans: if you stop paying, it covers the lender's loss, and you pay for this mortgage insurance through charges called premiums. USDA and VA guarantee their loans instead, promising to repay the lender part of what you owe, so USDA's loan is called a guaranteed loan. Each loan also uses the appraised value, what an appraiser hired for the loan says the home is worth.

All three are for a home you will live in. For FHA, one borrower must move in within 60 days of closing and plan to stay at least a year. A USDA guaranteed loan has a 30-year fixed rate only.

What do they cost besides the down payment?

Take a $300,000 home:

• FHA. With 3.5% down ($10,500), you borrow $289,500. The fee at closing, called the upfront mortgage insurance premium, is 1.75% of that, $5,066, and you can add it to the loan. You also pay a yearly premium of 0.55%, about $1,592 in the first year, split into your monthly payments. It shrinks a little each year as you pay the loan down. With less than 10% down, you pay it for the life of the loan; with 10% or more down, it stops after 11 years.
• VA. With no down payment, the first time you use a VA loan, the funding fee is 2.15%, $6,450. It drops to 1.5% if you put 5% down and 1.25% with 10% down. Using a VA loan again with less than 5% down costs 3.3%. If you get VA disability compensation, you pay no funding fee. You can add the funding fee to the loan, but you must pay other closing costs on closing day unless the seller pays them.
• USDA. For loans USDA approves from October 1, 2026 to September 30, 2027, USDA's notice sets a fee of 1% at closing, $3,000. The yearly fee is 0.35%, about $1,050 in the first year. The lender pays them to USDA and usually passes them to you, and the closing fee can be added to the loan.

Who qualifies for each loan?

• FHA. The lender checks your credit, income, debts and the home. You don't have to be a first-time buyer.
• USDA. Your household income can't be more than USDA's limit for your county. The limit is the highest of three figures based on national, state and local incomes. So it is never lower than 115% of the national median family income, the middle income of all U.S. families. For fiscal year 2026, that floor is $122,800 for 1–4 people and $162,100 for 5–8. The limit is higher where incomes are high. Look up your county on USDA's eligibility site. You must be a U.S. citizen, a U.S. non-citizen national or a qualified alien. USDA counts the income of everyone who lives in the home, not only the people on the loan.
• VA. You need a Certificate of Eligibility, a document from VA that tells a lender your service qualifies you. Most service members qualify after 90 days in a row on active duty, and most veterans who served since August 2, 1990 after 24 months in a row. You don't have to be a first-time buyer, and you can use the benefit again.

What must the home pass?

Each loan sends an appraiser to check the home's value and condition. FHA says the home must be safe, sound and secure. USDA wants a modest home in decent, safe condition, with road access and utilities, in an area it counts as rural. VA's appraiser checks that the home meets VA's minimum property rules and sets its value. If the VA value comes in below the price, you can ask for a second look, ask the seller to lower the price, or pay the difference yourself.

What are the 2026 loan limits?

Only FHA has a set dollar limit, and FHA's 2026 limits depend on the county.

With VA, if you still have another VA loan, the lender may ask for a down payment on the new one. That is because VA's promise to repay the lender then covers less of the loan.

Which loan fits which situation?

What should you do next?

1. Check the three tests: military service, your household income and the home's address.
2. Ask two or three lenders for a written Loan Estimate, the form that shows each loan's rate and fees, on each loan you qualify for.
3. Talk to a housing counselor approved by HUD; call 800-569-4287 to find one near you.
4. Look for down payment help from your state's first-time home buyer programs. If your credit is good, also compare an FHA loan with a conventional loan.
5. Use our qualify check to see which homes for sale fit your income, or browse lower-priced homes by area.