Four Real Differences, and in Missouri the Federal One Carries More Weight Than Usual
Program and regulatory figures verified October 10, 2026. Details change; confirm your scenario with us.
We write both, so this is a comparison rather than a pitch. The Missouri twist is that the usual state-level tiebreaker is simply absent.
★ Side by side
| Feature | VA | Conventional |
|---|---|---|
| Minimum down payment | ★★ None with full entitlement | Typically required |
| Monthly mortgage insurance | ★ None | Usually until equity is reached |
| Upfront fee | 2.15% to 3.3%, or 0 if exempt | No comparable VA-style fee |
| Loan limit | ★★ "No loan limit" with full entitlement | Conforming limits apply |
| Residual income test | ★ Yes | ★ No equivalent |
| Who must be eligible | Service history and entitlement | Anyone who qualifies |
| Occupancy | Principal dwelling rules apply | Investment property permitted |
★★ The deposit, and the sentence that qualifies it
The VA: with full entitlement you have "no loan limit (as long as you can afford the loan amount and the property appraisal supports the purchase price of the home)", and "your lender will still need to approve you for a loan."
★★ Both halves matter. The guaranty is uncapped; the underwriting is not. Which entitlement you have.
★ The fee is where the comparison is closest
A conventional borrower with a real deposit and no mortgage insurance is not obviously worse off than a VA borrower paying 3.3% on subsequent use. Where the comparison stops being close:
- ★★ If you are fee-exempt, a compensable service-connected rating, retirement pay in lieu, DIC, a memorandum rating before closing, or active duty with a Purple Heart, the fee is not charged, and a zero-fee no-deposit loan with no mortgage insurance has no conventional analogue. The five exemptions
- ★ If the deposit is the constraint, which in Missouri it usually is rather than the price.
★ The test only one side has
VA underwriting asks what is left in the household each month after the payment, taxes, insurance, utilities, maintenance, debts and withholding, against a threshold by household size and region. Conventional underwriting looks at ratios instead.
★ So the two can disagree in both directions. How the test works, and why Missouri pulls both ways on it.
★★★ And the Missouri difference, which is an absence
On the Ohio companion to this site, the fourth difference is a state one: Ohio's homestead reduction lowers a disabled veteran's escrowed tax and therefore their payment, which no loan product can replicate.
★★★ Missouri has no equivalent for most veterans. Mo. Const. art. X, § 6 reaches former prisoners of war only, and the Missouri Property Tax Credit is claimed on a return rather than applied to the escrow, so it does not move the payment. Why.
★★ The consequence for this comparison is clean: in Missouri, choosing between VA and conventional turns almost entirely on the federal factors above, because there is no state-level thumb on the scale. ★★ And it makes the funding-fee waiver relatively more valuable here than in a state with a real exemption. It is the benefit that actually shows up.
★ Where conventional genuinely wins
- Investment property. VA occupancy rules require a principal dwelling.
- A second simultaneous purchase can run into remaining-entitlement arithmetic a conventional loan does not have. The 25% guaranty rule
- A large deposit already in hand narrows the VA advantage considerably.
We write both. Bring the actual numbers and we will tell you which is cheaper for you. We publish no rates and no payment figures anywhere on this site.
Mike Certo, NMLS #260555. (480) 296-6513 · mcerto@cfmtg.com.
Frequently asked questions
Is a VA loan better than conventional in Missouri?
It depends on the deposit and on whether you are funding-fee exempt. A fee-exempt veteran gets a no-deposit loan with no mortgage insurance and no upfront fee, which has no conventional equivalent. A borrower with a large deposit in hand, or one buying investment property, may do better conventionally.Does Missouri state law affect the VA versus conventional choice?
Barely, which is unusual. In states with a disabled-veteran property tax exemption the state benefit tilts the decision. Missouri's exemption reaches only former prisoners of war, and its property tax credit is claimed on a return rather than applied to the escrow, so the choice turns almost entirely on federal factors.Do VA loans have mortgage insurance?
No. VA loans carry no monthly mortgage insurance. They carry a one-time funding fee instead, from 2.15 percent on first use to 3.3 percent on subsequent use with less than 5 percent down, and nothing at all for an exempt borrower.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about VA home loan financing, not a loan commitment and not legal, tax or financial advice. Cornerstone First Mortgage is a private lender and is not affiliated with, endorsed by or acting on behalf of the U.S. Department of Veterans Affairs or any government agency. VA entitlement, funding-fee exemption and disability ratings are determined by the U.S. Department of Veterans Affairs. Missouri's property tax exemption for former prisoners of war is established by article X, section 6 of the Missouri Constitution, and the Missouri Property Tax Credit is governed by sections 135.010 to 135.030 of the Revised Statutes of Missouri and administered by the Missouri Department of Revenue, not by Cornerstone. Proposed constitutional amendments described on this site are proposals and are not law. Figures here carry the date we verified them against primary sources. All loans are subject to borrower, property and program qualification.