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VA loan vs. FHA loan for Chicago buyers
Short answer
If you are eligible, a VA loan almost always costs less than an FHA loan in Chicago. VA needs no down payment and has no monthly mortgage insurance, while FHA needs 3.5% down plus upfront and annual mortgage insurance. FHA's 2026 Cook County limit is $541,287 for one unit; VA has no limit with full entitlement.
| VA loan | FHA loan | |
|---|---|---|
| Who can use it | Eligible veterans, service members, surviving spouses | Anyone who qualifies |
| Minimum down payment | 0% | 3.5% |
| Upfront fee | Funding fee 2.15% first use (0% if disabled) | Upfront mortgage insurance 1.75% |
| Monthly mortgage insurance | None | Annual premium, paid monthly, usually for the life of the loan |
| Cook County one-unit limit, 2026 | No limit with full entitlement | $541,287 |
| Seller concessions | 4% cap on concessions; closing-cost credits unlimited | Up to 6% toward costs |
| Condos | VA-approved projects | FHA-approved projects or single-unit approval |
| Credit floor | Set by lender, commonly 580 to 620 | 580 for 3.5% down |
Example: $350,000 Chicago condo
An eligible first-time VA buyer puts $0 down and finances a $7,525 funding fee, for a loan of $357,525 with no monthly mortgage insurance. An FHA buyer puts $12,250 down and pays monthly mortgage insurance on top of principal and interest. A disabled veteran pays no funding fee at all.
Weighing a conventional loan too? VA vs. conventional in Chicago.
When FHA might still fit
If you have used your VA entitlement and still have a VA loan open, and the remaining entitlement would require a large down payment, compare both. Also compare if a co-borrower who is not a spouse would be on the loan, since VA joint loans with non-veterans have extra rules.
Common questions
Is a VA loan better than FHA?
For eligible borrowers, usually yes: no down payment and no monthly mortgage insurance. The funding fee is one-time and waived for disabled veterans.
Can I switch from FHA to VA?
Yes. A VA cash-out refinance can pay off an FHA loan and drop FHA mortgage insurance.
Sources
What will your VA funding fee be?
Enter a price and down payment to see the 2026 fee, or check whether you are exempt.
An independent guide. Not affiliated with or endorsed by the U.S. Department of Veterans Affairs, and not a lender. General information, not legal, tax or financial advice.