What a VA home loan is and why it exists

A VA home loan is a mortgage backed by the U.S. Department of Veterans Affairs, available to military service members, veterans, and some surviving spouses. Unlike a conventional loan, the VA doesn't lend the money itself — a bank or mortgage lender does — but the VA guarantees a portion of the loan, which means the lender takes less risk if you stop paying. That may provide lets lenders offer terms that are often better than what you'd find elsewhere: no down payment required, no mortgage insurance, and sometimes lower interest rates.

The program exists because Congress created it after World War II to help returning veterans buy homes without the barriers that made homeownership difficult at the time. Today it remains one of the largest benefits available to the military community, and it's one of the few loan programs where you can buy a house with zero money down.

Key Takeaways

  • VA loans require a Certificate of may be able to access from the VA, which you can request online through VA.gov or by mail, and may be able to access depends on your branch, length of service, and discharge status.
  • You can borrow up to the full purchase price with no down payment and no mortgage insurance, though you will pay a one-time VA funding fee (usually 2 to 3.6 percent of the loan amount).
  • A lender will still check your credit score and income, so a VA loan is not automatic — you have to meet the lender's standards, not just the VA's.
  • The VA limits how much a lender can charge you for closing costs, and you can ask the seller to pay some or all of them, which is common in VA sales.
  • You can use a VA loan more than once, even if you've already used one to buy a home, as long as you meet the may be able to access rules each time.

Who can get a VA loan

To use a VA loan, you need a Certificate of may be able to access from the Department of Veterans Affairs. The certificate proves you served long enough and were discharged under conditions other than dishonorable. The exact length of service depends on when you served: generally, active-duty service members need at least 90 days of continuous active duty (or 181 days if you served during peacetime), and National Guard or Reserve members need at least six years. If you were discharged for a service-connected disability, the time requirement may be shorter.

Surviving spouses of service members who died on active duty or from a service-connected disability can also use VA loans, though the rules for remarriage and timing vary. You can request your Certificate of may be able to access online at VA.gov by logging in with your military credentials, or you can mail a form to the VA — the online route is faster, usually taking a few minutes.

Having a Certificate of may be able to access does not mean a lender will approve you. You still need to meet the lender's credit and income requirements, just as you would for any mortgage. The VA does not set a minimum credit score, but most lenders require 620 or higher. You'll also need to show that your monthly debt payments (including the new mortgage) don't exceed a certain percentage of your gross income — usually around 41 percent, though some lenders go higher.

How much you can borrow and what it costs

There is no VA-set limit on how much you can borrow — the limit depends on the lender and your income. However, the VA does set a guaranty amount, which is the maximum portion of the loan the VA will cover if you default. As of 2024, that guaranty is $36,000 for most loans, though it can be higher in some cases. In practice, this means lenders will typically approve you for loans up to about four times your annual income, though this varies by lender.

You can buy a home for any price, but if the purchase price exceeds the lender's comfort level, you may need to put money down. Many VA borrowers use the zero-down benefit, but you're not required to — some choose to put money down to lower the loan amount or the interest rate.

The main cost of a VA loan is the VA funding fee, a one-time payment due at closing. For most first-time users, this fee is 2.3 percent of the loan amount. If you've used a VA loan before, it's 3.6 percent. If you're a service member with a service-connected disability rated by the VA, or a surviving spouse of someone who died on active duty, you may not owe the funding fee at all. The funding fee can be rolled into the loan amount, so you don't have to pay it upfront in cash.

You will not pay private mortgage insurance (PMI), which is what conventional borrowers pay when they put down less than 20 percent. That's a significant savings — PMI can add hundreds of dollars to your monthly payment. You will pay property taxes, homeowners insurance, and possibly HOA fees, just like any homeowner.

The steps to getting a VA loan

Start by requesting your Certificate of may be able to access online at VA.gov if you have a login, or by mailing VA Form 26-1880 to the VA. Once you have the certificate (or even while waiting for it), you can contact lenders and get preapproved. Preapproval tells you how much a lender is willing to lend you based on your income and credit, and it's free.

When you find a home you want to buy, your real estate agent or lender will order a VA appraisal. The VA appraisal is different from a conventional appraisal — it includes a check that the home meets VA minimum standards for safety and livability. If the appraisal comes in lower than the purchase price, you have options: renegotiate the price, put money down to cover the difference, or walk away. The seller cannot ask you to cover the difference.

Once the appraisal passes, the lender will order a title search and homeowners insurance quote. You'll lock in your interest rate, and the lender will order a final walkthrough of the property. At closing, you'll sign the loan documents and the funding fee will be deducted (or added to the loan). The lender will then fund the loan and send the money to the seller's attorney or title company.

VA loan rules that differ from conventional mortgages

VA loans come with protections that conventional loans don't. The VA limits the closing costs a lender can charge you — you cannot be charged more than 1 percent of the loan amount for most fees, and certain fees (like appraisal, credit report, and title search) are capped at specific amounts. You can ask the seller to pay some or all of your closing costs, and in a competitive market, sellers often agree to this.

You also have the right to a VA loan assumption. If you sell the home to another buyer, that buyer can take over your loan at the same interest rate and terms, which is valuable if rates have risen. The buyer doesn't have to be a veteran, but they do have to meet the lender's credit and income standards.

The VA also protects you from certain predatory lending practices. For example, a lender cannot require you to buy a specific homeowners insurance policy or title insurance company. You can shop around for these services. Additionally, if you fall behind on payments, the VA has a loan modification program that may lower your monthly payment or extend the loan term before foreclosure becomes necessary.

When a VA loan might not be the best choice

A VA loan is powerful, but it's not always the right tool. If you're buying a home in a very hot market where sellers are receiving multiple offers, a VA loan can sometimes be less attractive to sellers because the VA appraisal process takes a bit longer and the VA has strict property standards. Some sellers worry that the appraisal will come in low. In these cases, a conventional loan with a large down payment might close faster.

If you plan to buy a second home as an investment property (not to live in), you cannot use a VA loan. VA loans are for primary residences only. If you want to buy an investment property, you'd need a conventional or other loan type.

If you have significant savings and want to put down 20 percent or more, a conventional loan might offer a lower interest rate in some market conditions, though this varies. It's worth comparing offers from both VA and conventional lenders before you decide.

Using a VA loan more than once

You can use your VA loan benefit multiple times. After you sell a home you bought with a VA loan, your entitlement is restored, and you can use it again to buy another home. Some veterans use their VA loan benefit several times over their lifetime as they move for work or want to upgrade their home.

If you still own a home you bought with a VA loan and want to buy a second home, you may be able to use your remaining entitlement, depending on how much of it you've used. A lender can calculate this for you. Keep in mind that you can only have one VA loan at a time for a primary residence — you cannot use the benefit to buy two homes simultaneously.

Frequently Asked Questions

Do I need a down payment for a VA loan?

No. VA loans are one of the few mortgage types that allow you to borrow 100 percent of the purchase price with no down payment. You will pay a VA funding fee instead, which is typically 2.3 to 3.6 percent of the loan amount and can be rolled into the loan.

What's the difference between a VA loan and a conventional loan?

A VA loan is backed by the government, so lenders take less risk and can offer better terms: no down payment, no mortgage insurance, and often lower interest rates. Conventional loans require a down payment (usually 5 to 20 percent) and mortgage insurance if you put down less than 20 percent. VA loans also have caps on closing costs and protections against predatory lending.

Can I use a VA loan if I was dishonorably discharged?

No. You must have been discharged under conditions other than dishonorable to be may be able to access. A dishonorable discharge is a felony-level conviction in a military court. Other discharge types — honorable, general, or other than honorable — may be may be able to access depending on your circumstances. Contact the VA to discuss your specific discharge.

What happens if the VA appraisal comes in lower than the purchase price?

You have three options: renegotiate the price with the seller, put money down to cover the difference, or cancel the purchase. The seller cannot ask you to pay the difference — that's a VA protection. If you walk away, you get your earnest money back.

Can I use a VA loan to buy an investment property?

No. VA loans are for primary residences only — homes you will live in. If you want to buy a rental property or vacation home, you would need a conventional loan or another loan type.