FHA vs VA vs Conventional Loans — Which California Mortgage Is Right for You in 2026

Choosing the right mortgage is one of the most important decisions you will make when buying a home in California. With several loan types available, each with different requirements, benefits, and trade-offs, it can feel overwhelming. At CA Realty Mortgage, we simplify the mortgage process for buyers across Elk Grove, Sacramento, Folsom, and Roseville. Here is a clear comparison of the three most popular loan types in 2026.

Conventional Loans

Conventional loans are the most common type of mortgage in California. They are not backed by a government agency, which means lenders set their own requirements. Conventional loans typically require a minimum credit score of 620, a down payment of at least 3 to 5 percent for first time buyers or 10 to 20 percent for repeat buyers, and a debt-to-income ratio below 43 percent. If you put down less than 20 percent, you will need to pay private mortgage insurance, or PMI, until you reach 20 percent equity. The biggest advantage of conventional loans is flexibility. They can be used for primary residences, second homes, and investment properties. They also offer competitive interest rates for borrowers with strong credit profiles.

FHA Loans

FHA loans are backed by the Federal Housing Administration and are designed to help buyers who may not qualify for conventional financing. They require a minimum credit score of 580 with a 3.5 percent down payment, or a score of 500 to 579 with a 10 percent down payment. FHA loans are popular with first time home buyers in Sacramento because of their lower entry requirements. However, FHA loans require both an upfront mortgage insurance premium and annual mortgage insurance that lasts for the life of the loan if you put down less than 10 percent. FHA loans can only be used for primary residences. For buyers with limited savings or recovering credit, FHA loans offer a realistic path to homeownership in California.

VA Loans

VA loans are available to eligible veterans, active-duty service members, and qualifying surviving spouses. They are backed by the U.S. Department of Veterans Affairs and offer some of the best terms available in the mortgage market. VA loans require zero down payment, have no private mortgage insurance requirement, and typically offer lower interest rates than conventional or FHA loans. There is a one-time VA funding fee that can be rolled into the loan amount. VA loans can only be used for primary residences. For eligible borrowers in the Sacramento area, VA loans are often the most cost-effective way to purchase a home.

Quick Comparison

Here is a side-by-side summary to help you compare. Conventional loans require a 620 minimum credit score, 3 to 20 percent down payment, and PMI if under 20 percent down. FHA loans require a 580 minimum credit score, 3.5 percent down payment, and mortgage insurance for the life of the loan. VA loans have no set minimum credit score from the VA though most lenders require 620, zero down payment, and no mortgage insurance. All three loan types are available for homes across Elk Grove, Sacramento, Folsom, Roseville, and surrounding California communities.

Which Loan Is Right for You?

The best loan for your situation depends on your credit score, savings, military status, and long-term plans. If you have strong credit and savings for a down payment, a conventional loan likely offers the best rates and most flexibility. If you are a first time buyer with limited savings or moderate credit, an FHA loan could be your best entry point. If you are a veteran or active-duty service member, a VA loan almost always provides the most favorable terms available.

Let CA Realty Mortgage Help You Choose

Our in-house mortgage team works with you one-on-one to compare loan options, calculate your monthly payments, and find the program that fits your budget and goals. We make the mortgage process straightforward and transparent so you can buy your California home with confidence. Reach out to us at dave@carealtymortgage.com to schedule a free mortgage consultation.