Side by side
| USDA | VA | Conventional | |
|---|---|---|---|
| Who | Moderate income households | Eligible veterans and service members | Anyone who qualifies |
| Down payment | None | None with full entitlement | As low as 3% for some buyers |
| Upfront cost | 1% guarantee fee | Funding fee, waived for many disabled veterans | Usually none |
| Monthly insurance | 0.35% for the life of the loan | None | Mortgage insurance until enough equity |
| Income limit | Yes | No | No |
| Location | Eligible areas only | Anywhere | Anywhere |
| Property | Single family, primary home | Up to four units, primary home | Primary, second home or investment |
Veterans: compare VA first
VA has no monthly insurance, no income limit and no location rules, and disabled veterans skip the funding fee. For most veterans, VA wins. The main exception is a non disabled veteran using their benefit again with little down, where VA's higher repeat funding fee can make USDA worth comparing over a short timeline.
USDA vs conventional
With little or nothing to put down and a home in an eligible area, USDA usually costs less. With strong credit and a solid down payment, especially 20%, conventional can win because there's no monthly insurance at all.
If you have money for a down payment
You don't have to use it. Many buyers take USDA's zero down option and keep their savings as a cushion for repairs and emergencies. Run the numbers both ways.
Switching programs mid process
It's possible to switch, like from FHA to USDA if the home turns out to be eligible, but it usually means new disclosures, possibly a new appraisal, and extra time. Choosing the right program before you write an offer saves headaches.
Also see USDA vs FHA.
A veteran who chose VA
Jamal qualified for both USDA and VA. He receives disability compensation, so his VA funding fee was waived.
VA had no upfront fee and no monthly insurance, while USDA would have added the 1% fee and 0.35% a year. VA saved him money from day one.
Frequently asked questions
Is USDA or VA better?
For most veterans, VA. No monthly insurance, no income limit, and disabled veterans skip the funding fee.
Is USDA cheaper than conventional?
Usually, with little down. With 20% down and strong credit, conventional can win.
Should I use USDA if I have a down payment saved?
Often yes, keeping savings as reserves. Compare both.
Can I switch from FHA to USDA before closing?
Yes, but expect new disclosures and extra time.