VA Home Loan

One of the many perks offered to veterans, active duty personnel, and their families is the ability to obtain a VA loan, which has a variety of features that help lower the cost of purchasing a home or refinancing an existing mortgage.

What is a VA Loan ?

A VA loan is a type of mortgage made accessible through a U.S. Department of Veterans Affairs. Veterans, service members, and the surviving spouses of these individuals can obtain VA loans to buy homes with little to no down payment, no private mortgage insurance, and typically competitive interest rates.

A VA loan is a particular kind of mortgage product that is only available to active-duty military personnel, veterans, and their spouses and dependents. Borrowers who meet the requirements can utilize a VA loan to restructure their mortgage, remodel and repair their homes, or create a new one.

VA Loans are guaranteed by the Department of Veterans Affairs, so if you can't make your payments, the VA will reimburse your lender for a portion of the home's value. VA loans are provided by private lenders, but the Veterans Affairs department guarantees a portion of the loans. Veterans can now qualify for mortgages with better terms and fewer restrictions than those offered by traditional lenders.

Key Facts of VA Loan

  • A VA loan is a mortgage that is provided under a program run by the US Department of Veterans Affairs.
  • Veterans Affairs (VA) loans, which are backed by the federal government but provided by commercial lenders, are accessible to active-duty and retired military veterans as well as their surviving spouses.
  • Low interest rates, no down payment requirements, no private mortgage insurance (PMI) payments, and no prepayment penalties are just a few of the attractive features of VA loans.
  • A VA loan is a type of mortgage that can be used to refinance an existing loan, buy a home, or make renovations to an existing one.
  • Although there are certain exceptions, you or your spouse (if you're married) must be a veteran or currently serving in the military to be eligible for a VA loan.
  • Even after a prior VA loan has gone into foreclosure, VA loans can still be used repeatedly.
  • There is no minimum credit score needed to qualify for a VA loan.
  • Your lender will learn that you qualify for a VA loan from your Certificate of Eligibility (COE).
  • A one-time upfront funding fee of up to 3.6% of the purchase price is required for VA loans.
  • For your first VA loan, there is no maximum amount you can borrow. Depending on where you live, the second VA loan you receive may be capped.

How Does a VA Loan Work ?

Veterans, active duty personnel, and their spouses may obtain a mortgage through the VA loan. They can be used to refinance an existing mortgage, purchase a new house, or make improvements to an existing one. The Department of Veterans Affairs is backing these mortgage loans. If the borrower fails on the loan, the VA will compensate the lender. The entitlement, also known as the VA guarantee, refers to the portion of the loan that VA will cover if you default. This would encourage lenders to provide veterans better rates.

It may be possible for qualified applicants to obtain a VA-backed loan with no down payment and no private mortgage insurance (PMI), which can result in significant savings and remove obstacles that could otherwise prevent certain veterans from purchasing a home. Applicants may apply for a VA loan more than once, but if the down payment is less than 5%, the funding fee increases each additional time. Between 1.4% to 3.6% of the loan amount is charged in fees.

Private lenders, including banks and mortgage firms, offer VA home loans. A VA eligibility certificate must be given to the lender when a borrower submits an application for a loan. You must present service-related documents, which may differ depending on whether you are an active duty military member or a veteran, in order to obtain the certificate. On the VA website, you can receive the certificate.

Discharges resulting from a disability or injury sustained during service, specific medical conditions, and a number of other circumstances are exempt from the service requirement.

Who is Eligible for a VA Loan ?

To qualify for a VA loan, you or your spouse must have served in the military on active duty or be a veteran. Certain members of the National Guard, Reservists, and surviving spouses of fallen service members might also be qualified.

You must fulfil a number of strict requirements before you can apply for a VA loan. They vary based on how long you served and whether you were in the National Guard, reserves, or active service. In general, if you started serving after August 2, 1990, and you were on active duty, you must meet one of the following criteria in order to be eligible for a VA loan :

  • A minimum of 24 months of continuous service.
  • At least 90 days during which you were called or ordered to active duty
  • If you were discharged due to a service-connected disability, less than 90 days.
  • If you were let go due to a hardship, the government's convenience, or a force reduction, you must serve at least 90 days.

Furthermore, to be qualify for a VA loan, you also cannot have received a dishonorable, bad-conduct discharge or other-than-honorable. In some circumstances, National Guard and reservists can also apply for VA loans. Six years of service, 90 days of active duty, and one of the following conditions are necessary for eligibility :

  • Honorable discharge
  • Transference to standby
  • Retirement placement
  • Continued service

If you've recently completed a short sale, filed for home foreclosure, or filed for Chapter 7 bankruptcy, you are not eligible for a VA loan (two years for Chapter 13 bankruptcy). But, after filing for bankruptcy, you might have to wait up to seven years before you can once again qualify for a traditional loan.

Other Requirements for VA Loan

Active duty service members, veterans, and their surviving spouses can purchase homes with the help of VA home loan. To get a VA loan, you'll need to meet the following Requirements.

1) Service Requirements :

Depending on when and where you served, different standards may apply. Depending on the branch of service and the date of your enlistment, you will need to have served for a specific amount of time. For active-duty military, that generally means at least 90 days of service. For veterans, it is at least two years of service with an honorable discharge.

2) Credit Score :

Although it is true in theory that VA loans do not have credit score requirements, in reality this is not the case. Lenders do set their own requirements for credit scores; the majority require a score of at least 620.

3) Debt-to-Income Ratio :

The maximum debt-to-income (DTI) ratio allowed for VA loans is 41%. In some circumstances, if your DTI is higher than that, you might still be qualified, but your lender will need to defend their decision to the VA.

4) Income Requirements :

VA loans do not have any predetermined minimum income limitations. Yet, lenders will want to make sure you have enough money coming in to cover loan payments. Depending on the lender and the size of the loan you're hoping to receive, this criteria might change.

5) Occupancy Requirement :

You or your spouse must reside in the home full-time to be eligible for a VA loan. The occupancy criteria may also be satisfied by a dependent child. VA loans are therefore only available for main residences. A VA loan cannot be used to buy an investment property, a vacation home, or anything else that you, your spouse, or your child won't be residing in permanently.

6) VA Appraisal :

Your lender will send a VA-approved appraiser to establish the real value of the home once you find it and apply for a VA loan. Whatever the purchase price ends up being, that is the most you will be able to borrow.

Types of VA Loan

Veterans who meet certain requirements can choose from a variety of strong home finance choices.

1) VA Purchase Loan :

Veterans can acquire a home at a reasonable interest rate with the aid of VA home purchase loans. A down payment or private mortgage insurance are frequently not necessary for these purchase loans.

2) VA Cash-Out Refinance :

Mortgage holders who take out cash-out refinancing loans can use the equity in their homes to pay off debt, pay for school, or make home upgrades. With this refinancing choice, home equity is turned into cash and a new mortgage is offered for a bigger sum than the current note.


By refinancing an existing VA loan, borrowers can get a lower interest rate through interest rate reduction refinance loans (IRRRLs), also referred to as VA streamline refinance loans. A fixed-rate loan can be refinanced at a reduced interest rate or an adjustable-rate mortgage (ARM) can be converted into a fixed-rate loan through this VA-loan-to-VA-loan process.

4) VA Energy Efficient Mortgage :

Veterans can obtain additional credit from the VA as part of a refinance or a home purchase to pay for energy efficiency upgrades. For eligible modifications like storm or thermal windows, heat pumps, and solar heating and cooling systems, veterans can finance up to an additional $6,000 in costs. The acquisition of appliances, window air conditioners, and other movable modifications is not permitted by this option.

The VA also provides funds for modified housing. With the aid of these grants, veterans with a total and permanent disability resulting from their service can buy, build, or renovate an adapted home to better suit their needs.

Terms of VA Loan

You'll quickly notice some terminology that aren't utilized with other forms of mortgages if you're looking for a VA loan. But compared to other mortgages and even other government loan programs, the terms of VA loans are relatively lenient.

1) No Down Payment :

The VA loan's major advantage for most borrowers is that there is no down payment required. It's still a good idea to put as much down as you can, if you can afford it. Even in a few instances, a down payment might be necessary for a VA loan.

2) No PMI :

With a conventional loan, you must pay private mortgage insurance (PMI) if you put less than 20% down. This safeguards the lender in the event of your default, but it may add a sizable sum to your monthly mortgage payment.

3) Closing cost Limits :

The seller will be responsible for paying some closing costs, such as the commission for the buyer's and seller's agents and a termite report, if you obtain a VA loan. Other charges, like the VA financing fee for your loan or the appraisal price, are optional and might be covered by the seller.

4) Lifetime Benefit :

Throughout the remainder of your life, you can keep using the VA loan benefit. Hence, you can still be eligible for a VA loan even if you've previously defaulted on a VA loan or your Certificate of Eligibility (COE) states that you have "$0 basic entitlement." The amount of the loan you can acquire is also unrestricted. If you're buying a property beyond the FHFA conforming loan limits in your area, which are $647,200 for most areas and up to $970,800 in high-cost areas, you might also be able to acquire two VA loans at once or a jumbo VA loan.

5) Lower Rates :

With the VA funding charge, which is calculated as a percentage of the entire loan amount, VA loans have a higher upfront cost. Average VA loan rates are often lower. Even better rates can be obtained by refinancing a VA loan through one of the unique IRRRL (Interest Rate Reduction Refinance Loan) programs, which let you continue with the VA loan program.

6) Certificate of Eligibility (COE) :

The COE informs lenders if you qualify for a VA loan and, if so, the maximum amount you can borrow without a down payment. You can apply for your COE using the VA's online eBenefits system, which produces COEs. If you give your lender a copy of your DD214 (if you're a veteran) or a statement of service (if you're in the military), they can check your eligibility for you as well.

7) VA Loan Entitlement :

Your VA loan entitlement is the sum that the VA will pay back to the lender if you can't make your loan payments. You are entitled to two different sorts of benefits: basic benefits and bonus benefits (also known as Tier 2 or additional entitlement). Together, these figures determine the portion of your loan that the VA will guarantee as well as whether and how much of a down payment you'll be required to make. 

Your basic entitlement, which is set at $36,000 if you have "full" eligibility, will be listed on your COE. You are fully entitled if any of the following statements are accurate. You've :

  • Never taken out a VA loan
  • Sold the home after paying off a prior VA loan, returning your entire entitlement.
  • Had a VA loan and then foreclosed or had a compromise claim, but paid off the loan completely.

You can utilize your basic entitlement for a loan that is less than $144,000. Your bonus entitlement is applicable for loans that exceed that sum. Using your bonus entitlement, the VA will finance up to 25% of the conforming loan restrictions established by your county.

You might still be allowed to use the remaining portion of your entitlement to buy a second property even if you've already used up a portion of it with one loan. Yet in this situation, you could have to put down money.

8) VA Loan Funding Fee :

Even while PMI is not required for VA loans, there is a different up-front fee called the VA loan funding fee. This administrative charge is exclusive to VA loans. It is a one-time expense that may be paid in full at closing or financed into your loan. 

If you've utilized a VA loan before and how much of a down payment you're making will determine the exact price. The cost is 2.3% if it's your first VA loan and you're not putting any money down. If you've previously used a VA loan, that rises to a maximum of 3.6%. No matter how many times you've used your VA loan, the charge is only 1.4% if you put at least 10% down.

What is the VA Loan Limits ?

Without a down payment, qualified veterans can borrow the full amount of their VA loan entitlement from any lender. The VA loan limits only apply to purchasers who fall short of their full entitlement due to one or more ongoing VA loans or the loss of an earlier loan due to foreclosure.

The maximum loan amounts that the Department of Veterans Affairs may support without a down payment are known as VA loan limitations. They establish the maximum you can finance with no money down, not the most you can borrow.

You can borrow up to the VA loan limit without having to put down any money. The regular VA loan ceiling for a single-family house in a typical U.S. county in 2023 is $726,200, but it can go up to $1,089,300 in high-cost locations. Even if the property price is more than the county cap, you may still be eligible for a VA loan, but you will have to put down money.

How to Apply for a VA Loan ?

Once you’ve confirmed you are eligible for a VA loan, you should typically take the following five steps to submit an application :

1) Get an Certificate of Eligibility: 

VA loan Certificate of Eligibility from the VA demonstrates to a mortgage lender that your military service satisfies the criteria for a VA loan. Before the loan can close, you must have the document, which a VA-approved lender can get for you. You can obtain yours by visiting and signing into your eBenefits account, or your lender may do it by using the Web LGY system. The VA also accepts mail-in or online requests for the certificate.

2) Find the lender :

While some VA lenders cater to clients with less than ideal credit, others provide a wider range of VA loan options. To compare the qualification requirements and mortgage rates of different VA mortgage lenders, get preapproved with several of them.

3) Find a Home : 

To buy a primary residence with a VA mortgage, it must also meet minimum property criteria to ensure it’s safe, clean, and structurally sound. Once you put in an offer on the residence you want, the lender will evaluate your finances and order a VA appraisal to make sure the house meets all the requirements.

4) Review your Closing Disclosure and Provide Approval Conditions :

The lender will send out your closing disclosure at least three business days before to your closing date, and the VA underwriter will examine any final conditions at that time. Check all the numbers again, and if you qualify for a funding fee exemption, in particular, be sure you aren't being charged one.

5) Bring your Cash to Closing and Sign Closing Documents :

The closing will normally take place in person in a title company, escrow agency, or lawyer's office. The property title is recorded into your name, and you are legally a homeowner, after the lender has reviewed your closing package and loan money have been wired.

VA Home Loan Phone Number

Call 1-877-827-3702 to speak with a VA Home Loan Representative. The VA Home Loan toll-free number is open from 8:00 am to 6:00 pm EST, Monday through Friday. Alternatively, contact the regional email addresses.

Frequently Asked Questions

What is the Veterans Affairs (VA) guaranty?
Even though the VA loan program is run by the federal government, veterans rarely receive direct government loans. Instead, the loan is financed by private lenders like Veterans United Home Loans, with backing from the Department of Veterans Affairs. Private lenders are encouraged to offer the VA loan with better conditions than other mortgage options because this guarantee shields the lender from total loss in the event that the buyer defaults.

What documents do you need to show that you qualify for a VA loan?
If you are a veteran, you are entitled to VA benefits and will want a copy of your DD-214. A statement of service containing your personal data and service information is required if you are an active-duty military member.

What credit score is required for a VA loan?
A VA loan can be obtained with no minimum credit score required by law. Yet, every lender establishes a minimal income and credit score criteria for their own needs.

How much can you borrow with VA loan?
With a VA home loan, there are no restrictions on the amount you can borrow, but the VA will only guarantee a part of the total loan amount. Yet, just because the VA has no maximum loan amount doesn't mean you may borrow as much as you want. The county in which you live might have its own cap, and you still need to meet the lender's requirements.
How effectively you meet a lender's requirements will determine how much money you can borrow from them. Most lenders will extend loans up to four times what you are eligible for under a regular VA loan. If you want to purchase a property that costs more than this, the VA may guarantee a bigger amount of your loan total, up to 25% of the conventional loan limitations in your county. If you make a down payment, your loan amount will increase.

Is it possible to obtain a VA loan more than once?
Though there are criteria, you can apply for a VA loan more than once. You must have completely repaid your prior VA loan and given up ownership of the property in order to be eligible for an additional full entitlement loan. You must still be eligible for partial entitlement, and the loan must not exceed the FHFA county loan restrictions.

How are closing costs for a VA loan calculated?
Banks will send you a bundle of loan disclosure documents, which will contain your anticipated closing costs, when you apply for a house loan.

Are VA loans difficult to close?
Even though VA home loans can have more conditions than normal loans, they aren't any more challenging to close.

How do I get a VA loan?
Consult a reputable lender who is knowledgeable about VA loans and how to maximize this labor-intensive benefit. Preapproval is often the first step in the process, which can be completed quickly using a phone, laptop, or tablet. Before placing an offer on your dream house, it's important to get your loan preapproved. A preapproval letter helps you understand your purchasing power and demonstrates to sellers and listing agents that you have what it takes to complete the transaction.

Can I use a VA home loan again if I've already used one?
Yeah, this is a continuous possibility. The VA loan advantage is yours forever once you have earned it. The VA loan can be used repeatedly, and you are even allowed to have multiple active VA loans at once.

Is a VA loan a good choice?
Maybe the strongest financing option available is a VA loan. They come with a long number of major advantages, such as no down payment requirements, no mortgage insurance, lenient credit requirements, and the lowest average fixed interest rates in the market. Every Veteran buyer's situation is unique, so discussing all of your financing alternatives with a home loan expert may help you guarantee you're making the best possible financial choice.

What are the benefits of VA Loan?
VA home loans feature lower interest rates, no down payment requirements, and no private mortgage insurance (PMI). While there is no requirement for a down payment or mortgage insurance, the upfront costs are considerably lower. The funding charge can be financed, included in your mortgage, and paid off over time. If a borrower sells their home, their VA loans can be transferred to the new owner. A VA mortgage can be assumed by buyers who are neither veterans or active military personnel.

What is the downside of a VA loan?
Veterans, active duty service members, and their spouses are the only groups eligible for VA loans, unless the conditions are assumed. If you purchase and take out a loan jointly with another person, neither you nor your spouse need to be a veteran or active military member. But, the other person must be eligible for a VA loan. These mortgages may only be issued by lenders with VA approval. If local home prices decline and you didn't pay a down payment and you had to finance your funding fee, you can find yourself paying more on your house than it is worth.