If you served in the military and you're buying a home in Texas, you've probably been told to look at both VA loans and FHA loans. Both are government-backed. Both are designed to help buyers who might not have a large down payment or perfect credit. But they are not the same program, and for veterans, the difference can be worth tens of thousands of dollars over the life of a loan.
Here's an honest comparison so you can make the right call for your situation.
What Is a VA Loan?
A VA loan is a mortgage benefit earned through military service. It's backed by the U.S. Department of Veterans Affairs and issued by private lenders like banks and mortgage companies. To qualify, you need to meet VA service requirements — typically 90 days active duty during wartime, 181 days during peacetime, or 6 years in the National Guard or Reserves.
The core advantages that make VA loans exceptional:
- $0 down payment required — you can finance 100% of the home's purchase price
- No private mortgage insurance (PMI) — ever, regardless of your loan-to-value ratio
- Competitive interest rates — VA loans consistently have lower average rates than conventional or FHA
- Flexible credit requirements — no official minimum, though most lenders want 580–620+
- Limits on closing costs — the VA restricts what lenders can charge you
The one cost VA borrowers pay that FHA borrowers don't: a VA funding fee. For first-time VA users putting $0 down, that's 2.15% of the loan amount. It's a one-time fee that can be rolled into the loan. Veterans with a service-connected disability rating are exempt entirely.
What Is an FHA Loan?
An FHA loan is backed by the Federal Housing Administration and available to anyone — you don't need military service to qualify. It's a popular choice for first-time buyers because it allows a 3.5% down payment with a credit score of 580 or higher.
The tradeoffs:
- Mortgage insurance is required — always. You pay an upfront premium of 1.75% of the loan amount, plus an annual premium of 0.55%–1.05% depending on your loan term and down payment
- MIP doesn't go away — if you put less than 10% down on an FHA loan, you pay mortgage insurance for the life of the loan. The only way out is to refinance into a conventional loan
- More property restrictions — FHA has stricter appraisal and property condition standards than VA
The Side-by-Side Comparison
| VA Loan | FHA Loan | |
|---|---|---|
| Down payment | $0 | 3.5% |
| Mortgage insurance | None | Required (life of loan if <10% down) |
| Upfront fee | 2.15% funding fee | 1.75% MIP |
| Credit score | Flexible (580+) | 580+ for 3.5% down |
| Who qualifies | Eligible veterans/service members | Any qualified buyer |
| Loan limit (Bexar Co.) | No limit (with full entitlement) | $524,225 |
Running the Real Numbers on a $325,000 Home in San Antonio
Let's say you're buying a $325,000 home.
VA Loan:
- Down payment: $0
- Funding fee (2.15%): $6,987 — rolled into loan
- Monthly mortgage insurance: $0
- Estimated monthly PI payment: ~$1,890
FHA Loan:
- Down payment: $11,375 (3.5%)
- Upfront MIP (1.75%): $5,513 — rolled into loan
- Annual MIP (~0.55%): ~$150/month for the life of the loan
- Estimated monthly PI + MIP payment: ~$1,970
Over 30 years, that $150/month in FHA mortgage insurance adds up to $54,000 in additional costs — not counting the down payment you had to bring to closing.
The VA loan costs more upfront in the funding fee, but saves significantly over time because there's no ongoing mortgage insurance.
When Might FHA Make More Sense?
There are scenarios where FHA is a reasonable choice even for veterans:
- You've used your VA entitlement on another property you still own
- The property doesn't meet VA minimum property requirements
- You have a co-borrower who isn't a veteran and you want to maximize both incomes
- You want to buy a multi-unit property (FHA allows 2–4 units with 3.5% down)
But for the vast majority of eligible veterans buying a primary residence in San Antonio or anywhere in Texas, the VA loan is the better financial choice.
Don't Forget Texas Down Payment Assistance
One more thing worth knowing: if for some reason you're using an FHA loan, Texas has excellent down payment assistance programs through TDHCA and TSAHC that can cover your 3.5% down payment and some closing costs. This changes the math somewhat — but you're still paying that monthly MIP.
With a VA loan, you start with $0 down and $0 monthly mortgage insurance. No assistance program can replicate that.
Get a Personalized Recommendation
Every borrower's situation is different. Your credit score, debt-to-income ratio, service history, and how long you plan to stay in the home all affect which loan makes the most sense.
Trey Garza at Home Finish Line specializes in VA loans for San Antonio veterans and military families. He can review your specific numbers, determine your VA eligibility, and tell you exactly which program puts the most money back in your pocket.
Book a free 30-minute call or start your pre-approval online — no cost, no obligation, no pressure.
Trey Garza | NMLS# 2700813 | Efinity Mortgage | San Antonio, TX