"Which loan is best?"
I get some version of this question on almost every first call. And I understand why — people want a clear answer. VA, FHA, conventional. Pick one. Tell me which one wins.
But here's the honest answer: the best loan is the one that fits your specific situation. Not the one with the lowest rate on a comparison chart. Not the one your buddy used. The one that makes sense for your income, your timeline, your cash position, and what you're trying to accomplish over the next five to ten years.
What I can do is walk you through how I actually think about this decision — the real trade-offs, not the marketing version.
If you're an eligible veteran or active-duty service member, your VA benefit is likely the most valuable financial tool you own. I'm not exaggerating.
No down payment. No monthly mortgage insurance. Competitive rates. Flexible guidelines on credit and debt. In a high-cost market like Orange County, this benefit can mean the difference between buying and waiting another three years.
The VA loan isn't a fragile unicorn. It's a flexible, powerful tool that most lenders don't fully understand — which is why so many VA borrowers get a worse deal than they should.
But here's where I push back on the "VA is always best" narrative:
VA loans require proper structuring and clear communication — especially in competitive markets. Some sellers and listing agents have outdated misconceptions about VA appraisals and timelines. A VA offer that's presented poorly can lose to a weaker conventional offer just because of perception.
That's not a problem with the loan. That's a problem with execution. And it's fixable — if your lender knows what they're doing.
The other nuance: if you already own a home with a VA loan and want to buy again, most people assume they can't. They're wrong. Bonus entitlement exists. Simultaneous VA loans are possible in Orange County because of our high county limits. But you need someone who actually understands entitlement math — not someone who stops at "you already used your VA loan."
• You have full or sufficient remaining entitlement
• You want to preserve cash and avoid a large down payment
• You're buying a primary residence that meets VA property guidelines
• Your lender can present the offer competitively to listing agents
FHA gets a bad reputation in high-cost markets, and it's not entirely fair.
Yes, FHA has mortgage insurance. Yes, some sellers prefer conventional offers. But FHA has saved deals that conventional couldn't touch — and for the right buyer profile, it's exactly the right tool.
FHA isn't second-class financing. It's a different structure with different strengths. The question is whether those strengths match your situation.
Where FHA genuinely shines for first responders:
• You have solid income but limited savings for a larger down payment
• Your credit profile has some history but isn't pristine
• You want flexibility in the qualification guidelines
• You're looking at a property that needs some work — FHA 203k renovation loans are underused and genuinely useful
The mortgage insurance is real, and it costs money. But if FHA gets you into a home two years earlier than waiting to save 20% for conventional, the math often still works in your favor — especially in a market where values tend to appreciate over time.
Run the numbers, not the assumptions.
• Down payment flexibility matters more than eliminating mortgage insurance
• The property needs renovation and a 203k makes sense
• VA isn't available and conventional requirements are a stretch
Conventional is where most move-up buyers land, and for good reason. It offers the widest range of structures, the most flexibility for long-term planning, and no VA funding fee or FHA mortgage insurance if you're putting 20% down.
But here's what I see constantly: buyers who chase the lowest conventional rate without understanding the structure they're agreeing to. Rate is one line item. The structure is everything else — the term, the amortization, whether you're preserving optionality for a future refinance or purchase, how the payment fits your cash flow over five years.
Rate doesn't matter yet. Structure does. Once we agree on the right structure, then we talk about rate.
Conventional also gives us the most room to get creative with asset-based qualification, income stacking, and move-up strategies. If you're a first responder sitting on a pension, strong assets, and a complex income picture, conventional often gives us the most tools to work with.
• You have 10-20% or more for a down payment
• You want to eliminate mortgage insurance
• You're a move-up buyer using equity from a current home
• Your income picture is complex and needs flexible structuring
When someone comes to me asking which loan is best, I don't answer that question. Not yet.
I ask: What are we actually trying to do here?
Is this about preserving cash? Maximizing buying power? Getting into a specific property? Planning for a rental down the road? Setting up a move-up in three years?
The loan type is the output of that conversation — not the starting point.
Here's a simplified version of how I think through it:
• VA eligible with sufficient entitlement and buying primary? Start with VA, run the numbers, address any property or offer concerns upfront.
• Limited savings, strong income, VA not available? Look hard at FHA before defaulting to conventional with a thin down payment.
• Move-up buyer, equity to work with, complex income? Conventional with a thoughtful structure.
• Already have a VA loan and want to keep the home? We're running bonus entitlement math and deciding whether to sell, rent, or bridge.
Every situation is different. The loan follows the strategy — not the other way around.
If you’re still unsure about affordability, read our guide on whether first responders can afford to buy a home in Rancho Santa Margarita.
Loan programs are tools, not labels.
The right choice supports your lifestyle today and your goals tomorrow.
Work with a knowledgeable Rancho Santa Margarita mortgage lender to determine which loan structure fits your goals.
