Getting a little warm in here, without shedding light on the subject.
How about a real-life example that I executed on?
Hokay, I went back and looked at the spreadsheet analysis I performed way back in late 2001 & early 2002, before we bought our house, the first for us.
I compared 30 year fixed, no points, loans: Conventional (w/ ~3% down), FHA, and VA. (I have 20% disability form the VA and waive the VA funding Fee.)
My credit score was in the mid-700s. Credit history included paid-off student loans and credit cards. (We used only my credit history and income, as we wanted to be able to stay afloat even if one of us was laid off. As it was, I qualified for WAY more than we intended to spend, like 50% more than we intended to spend.)
We shopped around, like I wrote above, for several conventional (~97%), FHA, and VA loans. We got numbers for closing costs, as well. We hit up my credit union, a couple local banks, a couple national banks, and a couple mortgage brokers.
Turned out that the VA loan had the highest raw percentage rate on the loan, but the lowest APR, the lowest closing costs, the lowest total needed at closing and the lowest monthly payment (P&I, no mort ins, taxes, home ins).
I think the lesson learned is that one has to run the numbers. The least attractive on the outside (due to raw loan pct rate) was the VA, but it turned out to be the best deal all-around, especially after waiving the VA Funding Fee due to my VA disability.
In other markets at other times, the numbers might have favored one of the others.
Get good data and run the numbers to figure out the real deal.
That 3% we had for a down payment? Instead, we invested it in a couple mutual funds and pulled it out after the Dow went from its high of ~14000 and tumbled to 13000. We then used it to finance babysitting for the kids while my wife went to nursing school. About the only sharp market move I have ever made.