VA Loan Overview
VA Loan Overview
VA home loans provide eligible Veterans, service members, and certain surviving spouses with home financing benefits created specifically for the military community.
Eligible VA borrowers may be able to purchase a home with no down payment when the sales price does not exceed the VA-appraised value and all VA and lender qualification requirements are met.
Most conventional purchase loans require some borrower down payment, and FHA financing generally requires a minimum down payment. VA financing can allow qualified eligible borrowers to finance up to 100% of the property's value without monthly PMI or MIP.
For Veterans who qualify, this combination of potential 100% financing + no monthly mortgage insurance is one of the most valuable features of the VA home loan benefit.
What Is a VA Loan?
The VA home loan program was created in 1944 to help eligible Veterans and service members purchase and maintain homes.
Most VA loans are made by private mortgage lenders. The U.S. Department of Veterans Affairs guarantees a portion of the loan, reducing lender risk and helping make favorable financing terms available to eligible borrowers.
Who Can Qualify?
VA Eligibility
Eligibility is generally based on qualifying military service or another VA-approved status. A Certificate of Eligibility (COE) verifies your VA home loan entitlement.
Mortgage Qualification
Having VA eligibility does not automatically approve the mortgage. Your lender must also review credit, qualifying income, debts, residual income, and the property.
Key VA Loan Benefits
Potential 100% Purchase Financing
Qualified eligible borrowers with sufficient entitlement may be able to finance the full purchase price when the sales price does not exceed the VA-appraised value.
No Monthly Mortgage Insurance
VA-backed loans do not require monthly PMI or FHA-style monthly mortgage insurance premiums.
Competitive Loan Terms
The VA guaranty can help lenders offer competitive mortgage terms. Actual rates and costs vary by lender and borrower qualifications.
No Prepayment Penalty
VA-backed loans do not charge a penalty simply because you pay the mortgage off early.
Flexible Credit Guidelines
VA does not establish a universal minimum credit score. Individual lenders may establish their own credit requirements.
Use Your Benefit Again
VA entitlement may be restored or reused in qualifying circumstances, allowing many Veterans to use the benefit more than once.
VA Qualification Looks at Your Full Financial Picture
- Credit history
- Stable and reliable qualifying income
- Monthly debt obligations
- VA residual income requirements
- Available VA entitlement
- Property value and eligibility
What Can You Buy?
Primary Residence Requirement
VA purchase loans are generally intended for a home you will occupy as your primary residence rather than a property purchased solely as an investment or vacation home.
VA Entitlement and Larger Loan Amounts
VA entitlement is the amount of guaranty available to support your VA loan. It is not the amount you are permitted to borrow.
Borrowers with full VA entitlement are not subject to a VA county loan limit. The borrower must still qualify for the requested mortgage and the property value must support the loan.
Borrowers already using part of their entitlement may have remaining entitlement. In those cases, applicable county loan limits can affect the amount of guaranty available and whether a down payment may be necessary.
VA Funding Fee
Many VA borrowers pay a one-time funding fee that helps support the VA home loan program. The funding fee can generally be financed into the mortgage or paid at closing.
Veterans who meet VA's funding-fee exemption requirements because of qualifying service-connected disability compensation pay no VA funding fee.
The exemption can apply to purchase loans, VA Cash-Out refinances, IRRRL Streamline refinances, and other VA transactions where the funding fee would otherwise apply.
If you have a pending VA disability claim, let your lender know early so your exemption status can be checked before closing. A qualifying retroactive disability award with an effective date before closing may also result in eligibility for a funding-fee refund.
| Loan Type | First Use | Later Use | Qualifying Exemption |
|---|---|---|---|
| Purchase - Less Than 5% Down | 2.15% | 3.30% | 0% |
| Purchase - 5% or More Down | 1.50% | 1.50% | 0% |
| Purchase - 10% or More Down | 1.25% | 1.25% | 0% |
| VA Cash-Out Refinance | 2.15% | 3.30% | 0% |
| VA IRRRL / Streamline | 0.50% | 0.50% | 0% |
Other Funding-Fee Exemptions
Exemptions may also apply to certain surviving spouses receiving Dependency and Indemnity Compensation, certain service members with a qualifying pre-discharge disability rating, and active-duty service members who provide qualifying Purple Heart documentation before closing.
Closing Costs and Seller Contributions
VA loans still have closing costs, including items such as appraisal, title, recording, lender charges, taxes, and insurance.
Sellers or builders may pay allowable closing costs. Certain VA seller concessions are generally limited to 4% of the home's reasonable value.
The VA Loan Process
Common VA Loan Questions
Can I really purchase with no down payment?
Many qualified eligible VA borrowers can. VA allows up to 100% financing when applicable requirements are satisfied and the sales price does not exceed the VA-appraised value.
Does VA require a minimum credit score?
No. VA does not establish a minimum credit score. Individual lenders may have their own minimum credit requirements.
Do I have to be a first-time homebuyer?
No. VA home loan benefits are not limited to first-time buyers.
Does qualifying VA disability eliminate the funding fee?
If you meet VA's applicable funding-fee exemption requirements, the VA funding fee is 0%.
Can I use my VA benefit more than once?
Yes, in many circumstances. Available entitlement and restoration rules determine the benefit available for another VA-backed loan.
Can the seller pay closing costs?
Yes. Sellers and builders may pay allowable closing costs, subject to applicable VA requirements.
Can I pay my VA mortgage off early?
Yes. VA-backed mortgages do not impose a prepayment penalty simply because you pay the loan off early.
See How Your VA Home Loan Benefit Can Work for You
VA Help Center can help you understand your eligibility, entitlement, potential 100% financing, funding-fee status, and available VA loan options.
CLICK HERE TO APPLY NOW Call 801-871-3739VA Help Center, LLC is a private mortgage company and is not affiliated with, endorsed by, or acting on behalf of the U.S. Department of Veterans Affairs or any other government agency.
100% financing/no-down-payment availability is subject to VA eligibility, sufficient entitlement, property value, borrower qualification, lender underwriting requirements, and other applicable program requirements.
Loan approval, availability, loan amount, terms, interest rates, fees, funding-fee status, and property eligibility are subject to applicable VA requirements, lender guidelines, borrower qualification, and applicable law. This information is provided for general educational purposes and is not a commitment to lend or guarantee of loan approval.