VA Loan vs Conventional in Washington: The Real Numbers

If you're eligible, the VA loan is usually the best mortgage in America, and most comparisons undersell it because they treat it as "the zero-down option" rather than reading the rate. It currently prices below conventional — 6.4% against 6.7%.

That said, it is not automatically the right answer, and the cases where conventional wins are real. Here's both sides with Washington numbers.

The four differences that matter

Rate. VA runs below conventional, because the loans are government-guaranteed and default less. Most people assume a zero-down product must price higher. For VA, it doesn't.

Mortgage insurance. Conventional charges it below 20% down — typically 0.45% of the loan annually — until you reach 20% equity. FHA charges it for the life of the loan at low down payments. VA never charges it, at any down payment. This is the single largest difference and it's the one most often left out.

Funding fee. VA's cost. 2.15% on a first-use zero-down purchase, dropping to 1.5% at 5% down and 1.25% at 10%. It's normally financed into the loan. Waived entirely for any borrower with a VA disability rating.

Down payment. VA needs none. Conventional needs 20% to avoid mortgage insurance, though 3–5% programs exist.

Same income, same county, both programs

$150,000 household income, no other debt, housing at 33% of gross, King County.

Conventional buys $116K more house — entirely because $133,908 of down payment is doing work that no rate advantage can match. VA needs $137K less cash to close.

That is the actual trade. Not rate, not insurance — both of which favour VA. The comparison is a smaller house now against a larger house after years of saving.

Where the VA advantage really shows: like for like

Compare VA against a conventional loan with the same zero down, and it isn't close. Against credit-union 100% financing at 7.375%:

If you're eligible and someone offers you a credit-union 100% loan instead, ask why. There are legitimate reasons — usually exhausted entitlement or a property VA won't approve — but "it's easier" isn't one, and it costs you the amounts above.

When conventional actually wins

You have 20% and plan to stay. The down payment beats the rate advantage, as the table shows. If you have the cash, conventional buys more house.

You're buying in a competitive multiple-offer situation. This one is unfair but real: some listing agents steer sellers away from VA offers over appraisal and repair requirements. The bias is often unfounded and, when it becomes a blanket refusal, may violate fair housing principles — but it exists, and in a bidding war it can cost you the house. A strong conventional offer sometimes wins where an equivalent VA offer doesn't.

The property won't pass. VA appraisals include minimum property requirements. Fixers, some rural properties, and certain condos don't qualify.

You've used your entitlement. Partial entitlement caps what you can borrow with nothing down. Worth a conversation with a lender who actually knows VA rules, not a general originator.

The disability waiver is worth more than people realise

Any VA disability rating — 10%, not just 100% — waives the funding fee entirely. On a $554,000 purchase in King County that's $11,903 you don't finance.

If you have a pending claim, mention it to your lender before closing. If it's approved after you close, you can apply for a refund of the fee you paid. People leave this money on the table constantly.

What to actually do

If you're eligible, get quotes for both. Compare on a written Loan Estimate, not an advertisement — many advertised rates include discount points, which makes them look better than a no-points quote. Compare like for like or the comparison is meaningless.

Compare VA and conventional on your numbers

Not affiliated with or endorsed by the Department of Veterans Affairs. Values are Zillow ZHVI as of 2026-07-31. Rates are no-points survey averages and change weekly.