If you’re eligible for a VA loan and buying a home in Arizona, the VA loan wins in almost every scenario. But “almost” is doing some work in that sentence — so let’s look at the real comparison.
The Quick Answer
For most eligible veterans and active duty servicemembers buying a primary residence in Arizona: use the VA loan.
Here’s why:
- $0 down payment vs 3–20% conventional
- No PMI vs required PMI under 20% down
- Lower average interest rates
- More flexible credit requirements
But there are edge cases where conventional makes sense. We’ll cover those too.
Side-by-Side: VA Loan vs Conventional
| Feature | VA Loan | Conventional |
|---|---|---|
| Down Payment | $0 | 3%–20% |
| PMI | Never | Required under 20% down |
| Interest Rate | Typically lower | Standard market rate |
| Credit Score | More flexible | 620+ typically |
| Funding Fee | 1.25%–3.3% | None |
| Assumable | Yes | Generally no |
The Real Cost Comparison in Arizona
Let’s use a real example. You’re buying a $400,000 home in Glendale, AZ.
VA Loan
- Down payment: $0
- PMI: $0/month
- Estimated monthly payment (6.5%, 30yr): ~$2,528
- VA funding fee (2.15%, first use): $8,600 — can be financed
- Total out of pocket at closing: ~$0–$2,000 (with seller concessions)
Conventional (5% down)
- Down payment: $20,000
- PMI: ~$267/month until 20% equity
- Estimated monthly payment: ~$2,402 + $267 PMI = $2,669
- Closing costs: $8,000–$12,000
- Total out of pocket at closing: $28,000–$32,000
The VA loan saves you $20,000+ upfront and $267/month on PMI alone. Over 7 years, that PMI savings adds up to $22,428.
When Might Conventional Make More Sense?
Despite the VA loan’s advantages, there are a few scenarios where conventional could be worth considering:
- You’re buying an investment property or second home. VA loans are for primary residences only.
- You want to avoid the VA funding fee on a high loan amount. On a $700,000 home, the funding fee is $15,050. If you have 20%+ down, conventional might save money long-term.
- The property doesn’t meet VA Minimum Property Requirements (MPRs). Fixer-uppers may not pass VA appraisal. Conventional loans have fewer property condition requirements.
The Funding Fee Factor
The VA funding fee is a one-time fee paid to the Department of Veterans Affairs:
- First use, $0 down: 2.15%
- Subsequent use, $0 down: 3.3%
- With 5%+ down: 1.5%
- With 10%+ down: 1.25%
Key exemption: Veterans with a service-connected disability rating of 10% or more are exempt from the VA funding fee entirely. If that’s you, the VA loan is an even clearer choice.
The Arizona Market Perspective
In the Phoenix metro and Luke AFB area, VA loans are common and well-understood by local sellers and agents. Our team negotiates VA purchases every week in Glendale, Surprise, Peoria, and across the Phoenix metro. We know how to structure VA offers that compete effectively — including how to address seller concerns about VA appraisals.
Bottom Line
If you’re VA-eligible and buying a primary residence in Arizona, use your VA benefit. The $0 down and no PMI alone make it the superior choice for the vast majority of buyers.
If you have questions about whether VA or conventional is right for your specific situation, contact us. We’ll run the numbers for your exact scenario — no obligation, no pressure.