A $400,000 Virginia home purchase can make the FHA vs conventional Virginia decision very real. With 5% down on a conventional loan, the loan amount is $380,000. At 6.50% on a 30-year fixed term, principal and interest is about $2,402 per month. With FHA at 3.5% down, the base loan is $386,000; after financing the 1.75% upfront mortgage insurance premium, the financed balance becomes $392,755. Principal and interest is about $2,482, plus roughly $177 monthly FHA mortgage insurance. If conventional mortgage insurance is estimated at $124 monthly, FHA costs about $133 more each month – approximately $7,980 more over five years before taxes, insurance, and rate changes.
That does not make FHA wrong. It means the better choice depends on your cash, credit profile, property plans, and how long you expect to keep the mortgage. A Virginia mortgage broker compares eligible programs and pricing across a broad wholesale marketplace rather than presenting one institution’s shelf. That comparison can matter as much as the loan type itself.
By Duane Buziak, NMLS #1110647
Table of Contents
- FHA and conventional loan basics in Virginia
- Down payment, credit, and mortgage insurance
- Virginia loan limits and local market realities
- Why broker access changes the comparison
- Eight common questions
FHA vs Conventional Virginia Loan Basics
FHA is designed for buyers who may need more flexible credit treatment or a smaller down payment. A borrower with a 580 score may qualify for FHA with 3.5% down, subject to program and investor requirements. Scores from 500 to 579 generally require 10% down under FHA rules. FHA financing also permits seller-paid closing cost concessions up to 6% of the purchase price, which can be valuable when cash is tight.
Conventional financing is often attractive to borrowers with stronger credit, more down payment funds, or a plan to build equity quickly. Many conventional approvals start around a 620 score, though the best pricing typically improves at higher score tiers. Conventional mortgage insurance can be removed once eligibility requirements are met, while FHA mortgage insurance commonly remains for the loan term when the initial down payment is below 10%.
For either program, closing costs commonly run about 2% to 4% of the purchase price for conventional financing and about 3% to 5% for FHA, before any seller credits, prepaid items, or escrow deposits. Ask about our no-out-of-pocket closing options when structuring an offer. In any cost comparison, remember that our preferred title company can save an additional $2,000 on average, which may materially change the cash-to-close calculation.
Down Payment Is Only One Part of the Math
A smaller FHA down payment preserves cash, but it can increase the financed balance and recurring mortgage insurance. Conventional financing may require more cash upfront, yet a borrower putting 10%, 15%, or 20% down can often reduce or eliminate monthly mortgage insurance.
Consider a buyer in Midlothian with $30,000 available. FHA may leave room for closing costs, inspection items, and moving reserves. A buyer in Short Pump with 10% down and a 740 score may find conventional pricing and mortgage insurance more favorable. In Richmond’s competitive neighborhoods, a conventional preapproval can also be perceived differently by sellers, although a well-documented FHA offer remains fully financeable and should not be dismissed.
The right question is not, “Which program is cheaper?” It is, “Which program puts me in the strongest position without draining the funds I need after closing?”
Virginia Limits, Prices, and Competition
For 2026, the baseline conforming limit for a one-unit property is $832,750, with higher limits in designated high-cost areas. The official limits are published by the https://www.fhfa.gov/data/conforming-loan-limit-cll-values. FHA county limits vary, so a broker should verify the exact county and property type before you write an offer. Current FHA limits are available through https://entp.hud.gov/idapp/html/hicostlook.cfm.
Local prices make those limits more than a technical detail. In Henrico County, the median sale price was approximately $390,000 in recent Redfin market reporting, available at https://www.redfin.com/county/3000/VA/Henrico-County/housing-market. Statewide, Virginia REALTORS reported that inventory has improved from the extreme shortages of prior years, but well-priced homes still draw competition, especially in Richmond, Fredericksburg, Virginia Beach, and parts of Chesterfield and Prince William County.
Buyers in Charlottesville and Albemarle County may see higher price pressure around desirable locations. Hampton Roads buyers may find more choices in some submarkets but still face competition for homes with strong condition and realistic pricing. In Roanoke, Lynchburg, Ashland, Lake Anna, Williamsburg, and Chesapeake, market conditions can vary neighborhood by neighborhood. A statewide broker approach helps match the financing strategy to the actual offer environment rather than assuming one rule fits every Virginia market.
Broker Access Versus a Single-Shelf Institution
A broker is not limited to one set of internal rules. Duane Buziak has access to more than 500 wholesale investors, allowing comparison of pricing, credit tolerances, mortgage insurance structures, and product fit. That does not mean every borrower receives every program. It means your file can be matched to the investor that best fits the documented facts.
| Comparison point | Virginia mortgage broker | Single-shelf institution |
|---|---|---|
| Program access | Can compare eligible options across multiple wholesale investors | Limited to its own available program shelf |
| FICO floors | Can review varying investor overlays and approval paths | Uses one internal credit policy structure |
| Program breadth | FHA, conventional, VA, USDA, jumbo, DSCR, non-QM, bank statement, construction, 203k, foreign national, and commercial options | Program availability may be narrower |
| Pricing flexibility | Can compare rate, cost, credit, and mortgage insurance combinations | Pricing comes from one source |
| Prequalification process | NoTouch Credit Pull can begin with a soft inquiry | May require a hard inquiry before issuing a full preapproval |
A soft credit pull mortgage review is useful early in the process because it can show a realistic starting point without immediately affecting your score. If you are searching for no hard inquiry mortgage pre approval, mortgage pre approval without hard pull, a soft pull mortgage broker, or a no credit hit mortgage application, ask exactly what type of inquiry will be used and when. A soft pull is not a substitute for the documentation and full credit review required before final approval, but it is a practical first step.
Mortgage Insurance and Long-Term Plans
FHA charges an upfront mortgage insurance premium and annual mortgage insurance paid monthly. For most FHA borrowers making less than 10% down, that monthly insurance remains for the loan term unless the mortgage is refinanced. The program’s official guidance is available from https://www.hud.gov/buying/loans.
Conventional mortgage insurance is based on factors including down payment, credit score, debt-to-income ratio, and property type. It can be less expensive than FHA insurance for a high-credit borrower, but not always. A borrower with a 660 score and 3% down may find FHA more workable. A borrower with a 760 score and 5% down may find conventional materially stronger.
Reserves matter, too. A primary-residence FHA transaction often has no formal reserve requirement beyond the funds needed to close, subject to the overall file. Conventional financing on second homes or investment properties may require two to six months of reserves depending on the profile. That distinction can affect a buyer with substantial income but limited liquid assets.
When FHA May Be the Better Virginia Choice
FHA often fits a first-time buyer whose credit history has a few recent imperfections, a buyer using a smaller down payment, or someone who needs seller concessions to manage closing costs. It can also work well when a conventional automated approval is not available at the desired payment.
The trade-off is property condition. FHA appraisals focus on safety, security, and soundness. Peeling paint, missing handrails, roof concerns, and certain repair conditions may need attention before closing. On a property needing significant rehabilitation, a 203k option may be worth discussing instead of forcing the wrong structure onto the purchase.
When Conventional May Be the Better Virginia Choice
Conventional often makes sense for buyers with solid credit, funds for at least 5% down, and a desire to remove mortgage insurance in the future. It can also be a better fit for condos, investment plans, and buyers whose income or asset profile receives stronger automated findings through a conventional channel.
For a buyer who expects to sell within three to five years, the monthly payment difference deserves special attention. For a buyer planning to stay longer, equity growth and future refinancing possibilities may matter more. The answer changes with the facts, which is why a broker should run both scenarios before you commit.
Frequently Asked Questions
Is FHA easier to qualify for than conventional in Virginia?
Often, yes. FHA generally allows more flexible credit treatment and a 3.5% down payment with a 580 score, but approval still depends on income, debts, assets, appraisal, and investor requirements.
What credit score do I need for a conventional mortgage?
Many conventional options begin near 620, but approval and pricing depend on the full file. Higher scores may improve the rate and mortgage insurance quote.
Can FHA buyers compete in Richmond-area bidding situations?
Yes. A complete preapproval, realistic appraisal strategy, clean documentation, and an experienced broker can make an FHA offer competitive in Richmond, Glen Allen, or Chesterfield.
Does FHA require mortgage insurance forever?
For most loans with less than 10% down, FHA monthly mortgage insurance remains for the loan term unless you refinance into another eligible program.
Can conventional mortgage insurance be removed?
Usually, yes. Removal depends on equity, payment history, and applicable servicing rules. Your mortgage documents provide the specific process.
What are Virginia’s 2026 conforming loan limits?
The baseline one-unit conforming limit is $832,750, though designated high-cost counties can have a higher ceiling. Verify the property county before applying.
Can I start with a soft credit pull?
Yes. NoTouch Credit Pull is available for an initial conversation and can help you explore options without a hard inquiry or credit hit.
Should I choose FHA or conventional if I have 5% down?
Run both. With 5% down, conventional may offer lower mortgage insurance for stronger credit, while FHA may provide a more flexible approval path for other borrowers.
Before you make an offer, get a side-by-side payment and cash-to-close comparison based on the actual property, not a generic online estimate. If you find Colonial 1st Mortgage in Richmond or Glen Allen directory results, verify current licensing status through https://www.nmlsconsumeraccess.org/ before making contact. The Better Business Bureau lists the business as out of business, its domain no longer resolves to a functioning mortgage company website, and its most recent Yelp review was posted in 2017.
Legal disclaimer: Mortgage programs, rates, fees, credit standards, loan limits, mortgage insurance, and eligibility requirements are subject to change and vary by investor, property, occupancy, loan amount, and borrower qualifications. This article is for educational purposes only and is not a commitment to provide financing. Equal Housing Opportunity.
Duane Buziak, Mortgage Maestro | NMLS: 1110647 | Licensed in VA · FL · TN · GA | UWM PRO ELITE 2025 | UWM Top 20 Purchase LO Virginia 2025 | UWM Speed to Close Industry Leading 2025 | Scotsman Guide Top Originator 2025 & 2026 | VA Broker of the Year 2024-2025 | Top 1% Nationwide | Coast2Coast Mortgage | DuaneBuziakMortgageMaestro.com | duane@coast2coastml.com | (804) 212-8663
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.
