If you’re buying a home in Hampton Roads with military service under your belt, the first financing question is almost always: VA loan or conventional? I get this one every week from buyers PCSing to Norfolk, Virginia Beach, and Chesapeake. The answer depends on your situation, but for most veterans and active duty service members, the VA loan wins — and it’s not even close. Here’s the side-by-side breakdown so you can see the numbers yourself.
In This Article
VA Loan vs Conventional Loan: The Big Differences
The two biggest advantages of a VA loan are zero down payment and no private mortgage insurance (PMI). On a $400,000 home in Chesapeake — close to the current median — that means you’re not coming out of pocket $12,000 to $80,000 for a down payment, and you’re not tacking on $150–$250 per month in PMI that builds zero equity. Conventional loans require at least 3% down (often 5–20% in practice), and if you put less than 20% down, you’re paying PMI until you hit that equity threshold.
VA loans also tend to carry lower interest rates. As of March 2026, average VA rates are running around 5.4–6.0% for a 30-year fixed, compared to about 6.0–6.3% for conventional 30-year fixed loans. That gap varies by lender and credit score, but over 30 years, even a quarter-point difference on a $400K loan adds up to roughly $20,000 in interest savings.
| Feature | VA Loan | Conventional Loan |
|---|---|---|
| Down Payment | 0% required | 3–20% (PMI if under 20%) |
| Private Mortgage Insurance | None | Required if less than 20% down |
| Funding Fee | 2.15% first use (can be rolled in) | None |
| Average Rate (March 2026) | ~5.4–6.0% | ~6.0–6.3% |
| Credit Score Minimum | No VA minimum (lenders set ~580–620) | 620–660 typical |
| Loan Limit (2026) | No limit for full entitlement | $832,750 conforming |
| Property Types | Primary residence only | Primary, second home, investment |
| Closing Cost Cap | 1% origination fee cap | No cap |
The VA Funding Fee: What It Actually Costs
The trade-off for no PMI and no down payment is the VA funding fee. For first-time use with zero down, it’s 2.15% of the loan amount. On a $400,000 loan, that’s $8,600. You can roll it into the loan, which most buyers do — bringing your total financed amount to $408,600.
Put 5% down and the fee drops to 1.5%. Put 10% or more down and it drops to 1.25%. Second and subsequent uses bump the zero-down fee to 3.3%, though it still drops with larger down payments. These rates are locked in through November 2031.
The key exemption: if you’re receiving VA disability compensation, you pay zero funding fee. That saves thousands at closing and is one of the most underused benefits I see.
Real Math: VA Loan vs Conventional on a Hampton Roads Home
Let’s run the numbers on a $400,000 home in Virginia Beach — a realistic scenario for an E-7 or O-3 with dependents buying in the Kempsville or Red Mill area.
| Cost Category | VA Loan (0% down) | Conventional (5% down) |
|---|---|---|
| Purchase Price | $400,000 | $400,000 |
| Down Payment | $0 | $20,000 |
| Loan Amount | $408,600 (includes funding fee) | $380,000 |
| Interest Rate | 5.75% | 6.10% |
| Monthly P&I | ~$2,384 | ~$2,306 |
| Monthly PMI | $0 | ~$190 |
| Total Monthly Payment | ~$2,384 | ~$2,496 |
| Cash to Close | ~$2,000–$4,000 | ~$24,000–$28,000 |
The VA loan buyer keeps $20,000+ in the bank, pays about $112 less per month, and never deals with PMI. The conventional buyer needs $20K–$28K upfront and pays more monthly until they hit 20% equity — which on a $400K home takes years. The funding fee is real money, but it’s financed and spread across 30 years. The down payment and PMI hit immediately.
When a Conventional Loan Makes More Sense
The VA loan isn’t always the right call. Conventional wins in a few specific situations. If you’re buying a second home or investment property, VA doesn’t allow it — the property has to be your primary residence. If you have 20% or more to put down, conventional eliminates PMI entirely and you avoid the funding fee. And if you’ve already used your VA entitlement and are carrying two VA loans, a conventional loan might be simpler for the third property.
I’ve also seen cases where a conventional loan closes faster because some sellers (incorrectly) believe VA appraisals are more difficult. That stigma has faded significantly in Hampton Roads, where VA buyers make up a huge share of the market. But it’s worth knowing about.
VA Loan vs Conventional Loan in Hampton Roads: Local Context
Hampton Roads is one of the largest military metro areas in the country. Naval Station Norfolk, NAS Oceana, Little Creek, Langley AFB, Fort Eustis — the military presence here means local lenders, appraisers, and sellers are very familiar with VA loans. You’re not going to run into the friction that VA buyers sometimes face in civilian-heavy markets.
The 2026 conforming loan limit is $832,750 for most Virginia counties, which covers the vast majority of homes in Virginia Beach, Norfolk, Chesapeake, and Suffolk. For VA loans with full entitlement, there’s no loan limit at all — you can go above conforming without a jumbo loan structure. That matters if you’re looking at waterfront or luxury properties in areas like East Beach or the Oceanfront.
Which Loan Should You Choose?
If you have VA eligibility and you’re buying your primary residence, use it. The combination of zero down, no PMI, lower rates, and capped closing costs makes it hard to beat with math alone. Save the conventional loan for investment properties or situations where you’re putting 20%+ down and want to keep your VA entitlement in reserve.
If you’re PCSing to Hampton Roads and want to walk through the numbers for your specific situation — rank, BAH, price range, credit profile — let’s talk. I work with several VA-savvy lenders in the area who can run both scenarios side by side. You can also search Hampton Roads homes on my site to see what’s available in your price range right now.