Mortgage Blog

VA Loans vs Conventional Loans Explained

September 3, 2026 | Posted by: Jack Shotbolt

Buying a home in Omaha means choosing the right financing path, and for veterans and active-duty service members, that choice usually comes down to a VA loan or a conventional mortgage. Both can get you into a home, but they work very differently when it comes to down payments, insurance costs, and eligibility. If you're comparing your options, finding the best VA loan company Omaha has to offer is often the first step toward a smoother, more affordable path to homeownership. Scroll down and explore the key differences so that you can make an informed decision.

What Is a VA Loan?

A VA loan is a type of mortgage insured by the U.S. Department of Veterans Affairs and meant primarily for veterans, active service members, and qualifying surviving spouses. Since a government entity covers a part of the loan, it allows private lenders to provide more generous terms compared to a regular mortgage.

The most well-known perk is the $0 down payment option. Most conventional loans require at least 3% to 20% down, but qualified VA borrowers can finance 100% of the purchase price. VA loans also skip private mortgage insurance (PMI) entirely, which can save borrowers hundreds of dollars every month compared to a low-down-payment conventional loan.

What Is a Conventional Loan?

Conventional loans aren't backed by a government agency. Rather, guidelines from Fannie Mae and Freddie Mac are the ones dictating their characteristics. Besides, these loans can be offered to anyone capable, as there is no restriction to only veterans like in government-backed mortgages. Usually, stronger credit and a bigger deposit are demands of these loans. In addition, a loan with less than 20% down will probably include a PMI component which remains until the borrower has sufficient equity in the house.

Conventional loans do have advantages, though. They can finance second homes and investment properties, something VA loans can't do, and they may close slightly faster since there's no VA appraisal or funding fee involved.

A Closer Look at the Numbers

Loan limits and program size matter when comparing financing paths, and the numbers shift every year. It was revealed by the Federal Housing Finance Agency that the 2026 baseline conforming loan limit for properties with a single unit went up to $832,750, an increase of $26,250 over 2025, because of continued growth in home prices across the country. That limit helps determine the amount of the buyers' standard conventional mortgage borrowing that can exceed without being classified as a jumbo loan. Also, indirectly, it affects the VA's calculation of veteran's partial entitlement remaining from their previous loan.

Key Differences That Affect Your Wallet

The financial gap between these two loan types can be significant. Here's where they diverge most:

• Down payment:  VA loans can require $0 down; conventional loans typically require 3% or more.

• Mortgage insurance:  VA loans never charge PMI; conventional loans require it below 20% down.

• Funding fee:  VA loans include a one-time funding fee (often 1.25% to 3.3%), which conventional loans don't have.

• Credit flexibility:  VA loans often accept lower credit scores than conventional guidelines allow.

• Property use:  Conventional loans can finance investment properties; VA loans are for primary residences only.

As eligibility is quite limited on both sides and the payment is also in tiers, most of the Omaha's homebuyers have decided just to hire a local VA professional rather than being stuck by trying to process VA forms on their own. The role played by working with the best VA loan company Omaha that is trusted by many veterans could change a whole experience, either make you feel like you are the one to blame for everything, or it can be so easy as getting one single step done at home - especially if your VA lender is an absolute stranger to entitlement codes as well as Certificates of Eligibility.

Why Local Guidance Matters

Loan guidelines are national, but the homebuying experience is local. Home prices and appraisal timelines vary from city to city, which is why working with a knowledgeable mortgage broker Omaha families already trust can simplify the process. A broker who understands both VA and conventional guidelines can compare real numbers side by side instead of leaving you to guess.

Shotbolt Mortgage works directly with Omaha-area veterans and civilian buyers to walk through both loan paths in plain language. Because Shotbolt Mortgage has experience with VA entitlement, funding fee exemptions, and conventional underwriting, the team can help borrowers see exactly what each option would cost over the life of the loan, not just at closing.

Which Loan Is Right for You?

If you're a veteran or active-duty service member buying a primary residence and want to avoid a large down payment and PMI, a VA loan is usually the stronger financial choice. But if there is no VA eligibility on your side or you are planning to buy an investment property, a conventional loan might suit you better.

There's no universal answer, since your credit, savings, and long-term plans all factor in. That's why sitting down with the best VA loan company Omaha has to offer, and comparing both scenarios, is worth the time before committing to either path.

Related Article:

How to Use a VA Home Loan Payment Calculator

The VA Home Loan Explained: A Simple Guide

VA Loan Eligibility Requirements: A Simple Guide

Key Takeaways

1. VA loans typically require no down payment and no PMI, while conventional loans usually require both unless 20% is put down.

2. VA loans charge a one-time funding fee; conventional loans don't, but they may cost more monthly through mortgage insurance.

3. Conventional loans can finance second homes and investment properties; VA loans are limited to primary residences.

4. The 2026 conforming loan limit rose to $832,750 per the FHFA, affecting conventional borrowing power nationwide.

5. A knowledgeable local lender can help clarify which loan type saves you more over time.

6. A local mortgage broker Omaha buyers are usually advised to compare the loan products based on the borrower's credit situation and level of income.

Final Thoughts

Choosing between a VA loan and a conventional loan comes down to eligibility, upfront costs, and long-term plans, not just interest rates. Veterans and service members often come out ahead with a VA loan thanks to the $0 down option and no PMI, but every situation is different. If you're weighing your options, reaching out to Shotbolt Mortgage for a personalized comparison is a practical way to see real numbers before deciding. For many Omaha-area veterans, connecting with the best VA loan company Omaha has available is the step that turns a confusing decision into a confident one.

Frequently Asked Questions

1. Do I need a down payment for a VA loan?

Not really. Most veterans qualifying for a VA loan can get a loan covering 100% of a house's cost with no requirement of a down payment at all.

2. Is PMI required on a conventional loan?

If you're putting down just 10%, they definitely will. Once your equity gets to 20%, PMI is most often canceled.

3. Can I use a VA loan to buy a rental property?

Never. VA loans are only for main homes. But under some circumstances, you are allowed to rent out the house.

4. What is the VA funding fee?

Its main purpose is to maintain the VA loan program through a one-time funding fee which usually runs between 1.25% and 3.3% of the loan amount.

5. How do I know which loan type is better for me?

There is an answer only for a case where your eligibility, savings, and goals are taken into consideration. One of the best approaches to deciding this is to talk to your local lenders such as Shotbolt Mortgage that can compare both types of loans.

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