This distinction clarifies the source of the funds or whether they are insured under a government program. The main effect to you, the borrower, is in the guidelines. VA and Cal Vet still allow you to finance 100% of your purchase price if you are eligible for the program. FHA used to be a prime source for high LTV (Loan to Value) loans, but conventional lenders have stepped in to grab the majority of that market. Different areas of the country are better served by different programs - this is just one more alternative in deciding how to structure your loan.