What you usually hear, and the honest answer

We hear a version of this every week, usually from someone who is a little embarrassed to ask. They saved hard. Maybe a bonus, maybe a house sale, maybe years of putting money away during deployments. Now they worry that pairing a big down payment with a VA loan looks naive, or that skipping the VA loan means leaving free money on the table.

Here is the honest frame. The VA loan's headline perks, no down payment and no monthly mortgage insurance, matter most when you put little or nothing down. Once you have 20% down, a conventional loan gets those same two perks on its own. What is left to compare is the funding fee, the rate, your entitlement and a few smaller details. That is a real comparison, not an obvious one.

What Each Loan Gives You

Start with what each loan actually does. VA.gov's purchase loan page, last updated January 7, 2026, lists the VA benefits: no down payment as long as the price is not above the appraised value, no private mortgage insurance, and fewer closing costs, which the seller may pay. Fannie Mae's rules, by name, say a conventional loan needs mortgage insurance above 80% loan to value, and that a primary home purchase can go as high as 97% loan to value.

The Funding Fee Math at Each Down Payment

VA.gov's funding fee page, last updated October 5, 2026, with rates effective April 7, 2023, sets the purchase fee by how much you put down. On first use: 2.15% with less than 5% down, 1.5% with 5% or more, and 1.25% with 10% or more. After first use, the fee is 3.3% with less than 5% down, then the same 1.5% and 1.25% at the higher down payments.

Notice what that means. With 20% down, the fee is 1.25% whether it is your first VA loan or your fifth. On a $360,000 loan that is $4,500, and VA.gov says the funding fee is the one cost you can roll into the loan amount on a purchase.

Now the big exception. The same VA.gov page lists who pays no funding fee at all, including Veterans receiving VA compensation for a service connected disability, those eligible for that compensation but receiving retirement or active duty pay instead, a surviving spouse receiving DIC, a service member with a proposed or memorandum rating before closing, and active duty members who show evidence of a Purple Heart on or before closing. If any of those is you, the main cost of the VA loan disappears, and the comparison often tilts hard toward VA.

Worked Example: A $450,000 Home Near Luke AFB

Example numbers, not a quote. A Veteran buys a $450,000 home in the West Valley near Luke with 20% down, $90,000. For a fair side by side, every column uses the Freddie Mac survey's 30 year fixed average of 7.18% for the week of November 5, 2026, a benchmark only and not a Pillar Mortgage Group rate. Real VA and conventional rates often differ from each other and from the average, which is the point we come back to below. If you are house hunting in that area, our Goodyear mortgage broker page covers the local side.

Property taxes, homeowners insurance and any HOA come on top of every column.

At the same rate, the fee exempt VA column ties the conventional column exactly, and the fee paying VA column costs about $30 a month more because of the financed $4,500. So with 20% down, the decision really rides on the rate each loan is offered at. A small rate edge either way can outweigh the funding fee over a few years, which is why we price both before you choose.

The last column is there to show what the VA loan is built for. With nothing down, the same home costs about $675 more a month, and you keep $90,000 in the bank. Some buyers want that cushion more than a lower payment. Neither choice is dumb. They are different priorities.