VA Home Loans for Veterans & Service Members

VA home loan benefits may help eligible Veterans, service members, and surviving spouses buy, build, improve, or refinance a primary residence. Qualified borrowers may be able to purchase without a down payment, and VA-backed loans do not require monthly private mortgage insurance. Nearly 90% of VA-backed loans are made with no down payment, according to the U.S. Department of Veterans Affairs.

VA eligibility does not guarantee loan approval. Borrowers must satisfy the VA's requirements and the participating lender's credit, income, occupancy, appraisal, underwriting, and property standards. Program rules, fees, and lender requirements may change.

How VA Home Loans Work

VA home loan benefits generally fall into two categories: VA-backed loans made by private lenders and VA direct loans made directly by the Department of Veterans Affairs.

VA-Backed Loans

A private lender, such as a bank, credit union, or mortgage company, provides the financing. The VA guarantees a portion of the loan against loss, which may allow the lender to offer favorable terms. Lenders must follow VA requirements and may also apply their own underwriting standards, sometimes called lender overlays.

VA Direct Loans

With a VA direct loan, the Department of Veterans Affairs acts as the lender. The Native American Direct Loan program is one example and is available only when the borrower, property, tribal government, and trust-land transaction satisfy current program requirements.

Common VA Loan Programs

VA-Backed Purchase Loan

• May allow an eligible borrower to buy a primary residence without a down payment when the purchase price does not exceed the appraised value
• Does not require monthly private mortgage insurance
• Offers limited allowable closing costs under VA rules, although borrowers may still have significant transaction expenses
• May be used for eligible one- to four-unit properties when the borrower occupies the property as a primary residence

Native American Direct Loan (NADL)

• May be available to eligible Native American Veterans and, in some cases, Veterans married to Native Americans
• Can be used to buy, build, or improve an eligible home on federal trust land
• The VA provides the financing directly rather than guaranteeing a private lender's loan
• The applicable tribal government must have a current Memorandum of Understanding with the VA

Interest Rate Reduction Refinance Loan (IRRRL)

• Available to refinance an existing VA-backed home loan when current VA and lender requirements are met
• May be used to seek a lower interest rate or move from an adjustable-rate mortgage to a fixed-rate mortgage
• Documentation, appraisal, occupancy, seasoning, recoupment, and underwriting requirements depend on the transaction and lender
• A 0.5% VA funding fee generally applies unless the borrower is exempt under current VA rules

VA-Backed Cash-Out Refinance

• May allow an eligible homeowner to replace an existing mortgage with a new VA-backed loan under different terms
• May provide access to home equity, subject to appraisal, lender, loan-to-value, and underwriting requirements
• May be used to refinance certain non-VA mortgages into a VA-backed loan
• Closing costs, interest, funding fees, and the increased loan balance should be carefully considered before refinancing

Who May Be Eligible

VA home loan eligibility is based primarily on service history, duty status, and the applicable eligibility category. A Certificate of Eligibility, commonly called a COE, confirms that the applicant meets the VA's service-related eligibility requirements. It does not guarantee mortgage approval.

• Veterans who meet the applicable active-duty service requirements
• Active-duty service members who meet current service-duration requirements
• Eligible National Guard and Reserve members
• Certain surviving spouses and other applicants recognized under current VA eligibility rules

In addition to obtaining a COE, borrowers must meet the lender's and VA's credit, income, residual-income, occupancy, appraisal, and property requirements.

Understanding the VA Funding Fee

Many borrowers pay a one-time VA funding fee on a VA-backed or VA direct home loan. This fee helps support the program because VA home loans may offer no-down-payment financing and do not require monthly private mortgage insurance. The fee may generally be paid at closing or financed into the loan, subject to VA and lender requirements.

Current Funding Fee Examples

• Purchase or construction loan, first use, less than 5% down: 2.15%
• Purchase or construction loan, subsequent use, less than 5% down: 3.3%
• Purchase or construction loan, 5% to 9.99% down: 1.5%
• Purchase or construction loan, 10% or more down: 1.25%
• Interest Rate Reduction Refinance Loan: 0.5%

Funding fee percentages and applicability may change. The exact fee depends on the loan type, down payment, prior use of the benefit, and whether the borrower qualifies for an exemption. Confirm the current amount with the VA and the lender before relying on an estimate.

Possible Funding Fee Exemptions

Certain Veterans, service members, and surviving spouses may be exempt from the VA funding fee. Examples may include borrowers receiving eligible VA disability compensation, borrowers who would be entitled to compensation but receive retirement or active-duty pay instead, certain surviving spouses receiving Dependency and Indemnity Compensation, and eligible active-duty Purple Heart recipients. The borrower's COE and the VA's current determination control.

A borrower who later receives a qualifying disability award with an effective date before the loan closing may be eligible to request a funding-fee refund. Eligibility and processing are determined by the VA, so borrowers should not rely on a promised refund amount or timeline before receiving an official decision.

VA Loans Compared With Conventional Financing

• Down payment: Qualified VA borrowers may be able to purchase with no down payment. Conventional down payment requirements vary by loan product and borrower.
• Mortgage insurance: VA-backed loans do not require monthly private mortgage insurance. Conventional mortgages may require private mortgage insurance when the down payment is below the lender's threshold.
• Credit standards: The VA does not publish one universal minimum credit score for all VA-backed loans, but private lenders may establish minimum scores and other underwriting requirements.
• Reuse of the benefit: Eligible borrowers may use the VA home loan benefit more than once, subject to entitlement, restoration, payoff, property, and lender requirements.

Buying your first home? Compare VA financing with the options described on our first-time home buyer programs page and discuss the costs and requirements with a qualified lender.

Frequently Asked Questions

Is a down payment always required?

Not necessarily. An eligible borrower with sufficient entitlement may be able to purchase without a down payment when the lender approves the loan and the purchase price does not exceed the property's appraised value. A down payment may still be required in some transactions, including when entitlement is limited or the purchase price exceeds the appraised value.

How do I get a Certificate of Eligibility?

Many participating lenders can request a COE electronically. Eligible applicants may also request one directly through the VA. Supporting documentation can vary and may include discharge papers, a statement of service, or other service records.

Can I use a VA home loan more than once?

Yes, in many circumstances. Entitlement may be restored after an eligible loan is paid off and the property is sold, and some borrowers may have remaining entitlement available while another VA-backed loan is outstanding. The amount available depends on the borrower's COE, prior use, current loans, county limits when applicable, and lender approval.

Is there a VA loan limit?

Borrowers with full entitlement generally do not have a VA loan limit, although the lender must still approve the requested amount and the appraisal must support the property value. County conforming loan limits may affect borrowers who do not have full entitlement.

Can I buy an investment property?

A VA-backed purchase loan is intended for a home the borrower will occupy as a primary residence. An eligible multi-unit property may be permitted when the borrower occupies one unit, subject to VA, lender, appraisal, property-management, and rental-income requirements.

Review Your VA Home Loan Options

Entitlement, funding fees, lender overlays, occupancy rules, property standards, and refinancing requirements can vary by borrower and transaction. A qualified VA lender can review your COE, finances, and proposed purchase or refinance and explain the options for which you may be eligible. Only the lender and the VA can make eligibility and approval determinations.

Ryan Postell is a real estate broker, not a mortgage lender, loan officer, attorney, tax advisor, financial advisor, or representative of the U.S. Department of Veterans Affairs. This page is provided for general educational purposes only and is not a commitment to lend, an offer of credit, or a guarantee of eligibility, approval, interest rate, savings, or loan terms. Verify current requirements with the U.S. Department of Veterans Affairs and a qualified participating lender. Equal Housing Opportunity.