Picking the wrong loan type can cost you $200-$300 monthly for years. Here’s how VA, FHA, and conventional loans actually compare on Triangle purchases—with real payment math that shows which saves money by credit score.

Why loan choice matters more in Raleigh

With median home prices hovering around $450k in Raleigh (Redfin, September 2025), small rate or fee differences create big monthly payment gaps. Add the Triangle’s mix of military families, young professionals, and first-time buyers—each with different loan advantages—and program choice becomes critical.

Most buyers focus only on rates, missing insurance costs, funding fees, and qualification quirks that change the real monthly payment. Credit scores affect all loan types differently, making comparison essential.

Payment math by loan type

Here’s the breakdown on a $450,000 Raleigh home with 5% down ($427,500 loan amount), excluding taxes/insurance/HOA:

Numbers vary based on current rates and lender pricing, but the pattern holds: VA typically wins with good credit due to no mortgage insurance, while FHA edges ahead for lower scores despite MI costs.

When each loan type wins

VA loans dominate when: You have military eligibility and decent credit (680+). No mortgage insurance and competitive rates often create the lowest payment, even with funding fees.

FHA makes sense when: Your credit score sits between 580-679, or you need the 3.5% down payment flexibility. Mortgage insurance is fixed regardless of credit, creating predictable costs.

Conventional works best when: You have 720+ credit and 10%+ down payment. PMI drops off at 78% loan-to-value, while FHA mortgage insurance often stays for the loan’s life.

Triangle-specific twist: VA buyers often compete better in multiple offer situations since sellers know VA appraisals are thorough but fair. FHA sometimes faces seller resistance due to inspection requirements.

The qualification reality check

Loan type eligibility shapes your options before payment math matters. VA requires military service connection—active duty, veterans, or eligible spouses. FHA accepts credit scores as low as 580 but requires mortgage insurance for the loan’s life in most cases.

Conventional loans offer the most flexibility but demand higher credit scores (typically 620+) for competitive rates. Debt-to-income ratios matter across all programs, though VA and FHA allow slightly higher ratios than conventional in some cases.

Income stability trumps everything. Lenders want two years of consistent earnings, regardless of loan type. Self-employed buyers face additional documentation requirements across all programs.

Common loan choice traps

The biggest mistakes Triangle buyers make:

• Assuming VA loans always cost less without running actual payment comparisons including funding fees
• Picking FHA for low down payment without considering long-term mortgage insurance costs
• Choosing conventional for “faster closing” when rate differences create higher monthly costs
• Not exploring all options upfront—switching loan types mid-contract can delay closing

Local lender insights

Triangle-area lenders see common patterns: VA buyers often underestimate funding fees, FHA buyers focus on low down payment without calculating total costs, and conventional buyers sometimes over-qualify when other programs offer better value.

Smart move: Get pre-approved for multiple loan types if you qualify. Rates and fees shift, so knowing your options before house hunting prevents payment surprises during contract negotiations.