Texas VA Loans vs Conventional Mortgages: Which Saves You More?

Not every homebuyer in Texas has access to the same mortgage options. If you are an active duty service member, a veteran, or the surviving spouse of one, you may be eligible for a VA loan. For others, or for some who qualify but want to compare, a conventional mortgage is another widely used choice.

When it comes to va loans vs conventional loans, the differences in requirements, costs, and long term benefits can be substantial. Both can help you buy or refinance a home, but the option that saves you the most depends on your eligibility, financial situation, and homeownership goals.

In this guide, we will compare va loans vs conventional mortgages in Texas, looking at eligibility, fees, interest rates, and potential savings.

What Is a VA Loan?

A VA loan is a government backed mortgage program administered by the United States Department of Veterans Affairs and issued through approved lenders. The program was created to help service members, veterans, and eligible surviving spouses achieve homeownership without the heavy upfront costs common with other loan types.

Key VA loan benefits include:

• No down payment required for most borrowers
  
  
• No private mortgage insurance (PMI)
  
  
• Competitive interest rates that are often lower than conventional loans
  
  
• Flexible credit requirements compared to traditional mortgages
  
  
• Limits on certain closing costs
  

Because VA loans are guaranteed by the government, lenders take on less risk, which often results in more favorable terms for the borrower.

What Is a Conventional Loan?

A conventional mortgage is any home loan not backed by a government agency. Most conventional loans are conforming, meaning they follow the lending standards set by Fannie Mae and Freddie Mac. Some, such as jumbo loans, are non conforming because they exceed standard loan limits.

Key conventional loan features include:

• Minimum down payment of three percent and twenty percent to avoid PMI
  
  
• Available for primary residences, second homes, and investment properties
  
  
• Typically require higher credit scores than VA loans
  
  
• Loan limits vary by county and in most Texas counties the 2025 limit is seven hundred sixty six thousand five hundred fifty dollars for a single family home
  

VA Loans vs Conventional Loans: Side by Side Comparison

A VA loan typically has a lender minimum credit score requirement of 580 to 620, while conventional loans usually require a score of 620 or higher. For down payments, VA loans often allow zero percent, whereas conventional loans generally require at least three percent. The preferred debt-to-income ratio for a VA loan is under 41 percent, while conventional loans may allow up to 50 percent. VA loans do not require private mortgage insurance (PMI), but conventional loans require it if the down payment is less than 20 percent. VA loans are limited to primary residences only, while conventional loans can be used for primary, secondary, or investment properties. Special requirements for VA loans include a Certificate of Eligibility (COE), whereas conventional loans have no special requirement. Additional fees for VA loans include a VA funding fee unless exempt, while fees for conventional loans vary by lender.

Credit Score Requirements

When comparing va or conventional loan approvals, credit score plays a big role.

For VA loans, the Department of Veterans Affairs does not set a minimum score, but most Texas lenders look for 580 to 620. The flexible approach makes VA loans accessible to more borrowers.

For conventional mortgages, a minimum score of 620 is common, but the best rates are usually offered to borrowers with much higher scores, often 740 or more.

Down Payment Rules

One of the biggest savings advantages of VA loans is the lack of a down payment requirement for most borrowers. On a three hundred thousand dollar Texas home, this could save you nine thousand dollars with a three percent down conventional loan or sixty thousand dollars if you were aiming for a twenty percent down payment to avoid PMI.

With conventional loans, putting less than twenty percent down triggers PMI, which increases your monthly cost until you reach enough equity to remove it.

PMI vs Funding Fee

Private mortgage insurance is a cost unique to conventional loans when the down payment is under twenty percent. It can be a monthly expense or an upfront fee depending on the lender’s terms.

VA loans have no PMI, but they do require a VA funding fee unless you are exempt due to a service related disability. This is a one time cost, typically between one point two five percent and three point three percent of the loan amount, and it can be rolled into the mortgage to avoid upfront payment.

Property Eligibility in Texas

With a VA loan, you can only buy a primary residence. This can be a single family home, condo, or even a multi unit property if you live in one of the units.

Conventional loans are more flexible when it comes to property type. They can be used for primary residences, vacation homes, and investment properties.

Closing Costs and Loan Limits

VA loans in Texas come with capped closing costs, which helps keep upfront expenses lower. Also, there are no loan limits if you have full VA entitlement. You can borrow as much as your lender approves as long as you qualify.

Conventional loans have set limits per county and in most Texas counties for 2025 that limit is seven hundred sixty six thousand five hundred fifty dollars for a single family property. Higher amounts require a jumbo loan which usually comes with stricter qualification standards.

Interest Rate Trends

Historically, VA loans tend to have slightly lower interest rates than conventional loans, often by about zero point two five percent to zero point four zero percent. Over the life of a thirty year mortgage, that difference can save Texas borrowers thousands of dollars in interest payments.

Which Saves You More in Texas?

If you qualify for both, comparing va loans vs conventional loans side by side is the smartest move. For many eligible buyers, VA loans offer:

• Lower upfront costs with no down payment and no PMI
  
  
• Lower monthly payments with competitive rates and no PMI
  
  
• More forgiving credit requirements
  

Conventional loans may be the better fit if you are buying a second home or investment property or if you have the cash to make a large down payment and secure the best rates.

However, for primary residences in Texas, VA loans often win when it comes to total savings over the life of the loan.

Final Thoughts

For veterans, active duty service members, and eligible surviving spouses in Texas, VA loans remain one of the most cost effective ways to buy a home. They remove the biggest barriers to entry such as large down payments and PMI while offering competitive interest rates.

At Dylken Home Loans, we focus on helping qualified Texans take full advantage of the VA loan benefit they have earned. If you want to see how much you could save with a VA loan compared to a conventional mortgage, we can help you run the numbers and explore your options.

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