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Military Veterans and those actively serving have earned a number of significant VA home loan benefits. We understand the value of those benefits, and we’re here to help you maximize them and make the smartest decisions for you and your family. To show our support for those who serve, we also offer additional benefits, including no lender fee at close1 and relaxed credit policies.
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No lender fee at close and relaxed credit
We do not charge a lender fee at close and offer relaxed credit policies.
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Our VA specialist team includes Veterans and has processed more than $20 billion in VA loans. 2
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Common misconceptions about VA home loans
VA mortgages follow stricter guidelines.
VA loans take longer to process than Conventional, FHA or Jumbo loans.
VA appraisals are more complicated.
You can only use your VA home loan benefits once.
VA loans have limits in place.
Your guide to VA home loans
For over 75 years, one of the leading ways to secure an affordable mortgage has been through obtaining a government-backed VA loan. With low rates, reduced closing costs and flexible financing, eligible military-related personnel often find that a VA home loan is the ideal solution to their lending needs.
Table of contents
VA loan requirements & Certificate of Eligibility (COE)
VA loans vs. USDA and FHA loans
What is a VA home loan?
In 1944, Congress and the Department of Veterans Affairs (VA) came up with the enterprising notion to offer military service members a unique, affordable way to secure home loans and build equity at below-market rates. Since that time, the VA home loan has been one of the cornerstones of American lending, helping millions of current and former military personnel and their surviving spouses purchase homes, refinance or obtain a loan for purposes of home renovation.
Like FHA and USDA loans, VA home loans are backed by the federal government and can therefore be offered to eligible borrowers without requiring a down payment. They are typically issued by private lenders including banks, mortgage companies and credit unions, although in certain circumstances (disabled veterans and Native Americans) the VA provides direct home loans.
Over the years, the VA home loan program has proven to be an extremely versatile and popular option, paving the way for millions of borrowers to receive the benefits of accessible, affordable homeownership. This is made possible by the federal government’s guaranty to eligible lenders that they will step in and cover a portion of borrower debt in the event of a loan default. Essentially, this is a way of transferring risk from the lender to the U.S. government, and it has resounding implications in terms of affordability and access. For example, when compared to conventional loans, VA government-backed loans have lower minimum credit score requirements, reduced closing costs and more attractive interest rates.
If you’re a current or former military service member or spouse with relatively sound credit, it behooves you to take a moment and speak with a trusted lender who’s experienced in handling VA home loans and mortgages. You may be surprised at the savings that await.
VA loan requirements & Certificate of Eligibility (COE)
VA loan requirements are two-fold: There are the requirements issued by the VA and there are the requirements your lender will insist on that relate to credit score, income and acceptable levels of debt.
VA loan eligibility: Service members
The VA loan program is specifically designed to help military personnel and their spouses obtain affordable housing; however, not everyone is eligible. Those interested in getting a VA loan should familiarize themselves with the following requirements:
- Active duty members need to have served 90 consecutive days during wartime or 181 days of active service during peacetime.
- Veterans must meet the length-of-service standards, according to VA.gov.
- National Guard or Selected Reserve members must have completed six (6) years of service.
Current or former service members have to meet one (or more) of the above conditions to qualify. Once conditions are met, they will then earn a VA Certificate of Eligibility (COE), which is provided to the lender in order to receive the full benefits of the VA loan program. Most lenders today have access to the web-based ACE (Automated Certificate of Eligibility) system to expedite COE eligibility.
VA loan eligibility: Surviving spouses
Surviving spouses of veterans who were killed, injured or captured in the line of duty are also eligible. If you’re a spouse looking to procure VA financing, you will need to meet the following requirements:
- You have not remarried.
- Your spouse was killed in the line of duty or from a service-related disability.
- Your spouse was rated disabled and therefore eligible for disability compensation at the time of death.
- Your spouse was missing in action or a verified prisoner of war (POW) for at least 90 days.
These requirements should not be considered all-inclusive, and there may be exceptions for spouses not listed here.
Whether you’re a former or current service member or surviving spouse thereof, if you’re still unclear about VA home loan eligibility requirements or have further questions, make sure to contact the Department of Veterans Affairs.
VA loan limits
While VA loans provide an incredible way for eligible applicants to acquire a home loan, they have historically come with a few stipulations, notably loan limits.
Entitlement
Entitlement is a key feature of any VA loan. If you’ve never used the VA loan benefit before and are otherwise eligible, you will have full entitlement. In terms of financing, this means that the VA is willing to guarantee payment of a portion of your loan to your lender if you default. That portion is typically 25% of the loan, which under basic entitlement is $36,000 ($36,000 x 4 = $144,000, the previous loan limit).
In light of 2019’s legislation, eligible service members are (potentially) entitled to receive a loan that matches the 2021 conventional loan limit of $548,250 (with the VA guaranteeing up to one quarter of that amount or $137,062). Of course, to secure such loans, you’ll still have to be approved by your lender and meet their specific requirements.
It’s also important to keep in mind that borrowers are typically limited to securing one VA loan at a time (although there are some exceptions. You might not have full entitlement but a mortgage specialist can put together a VA loan max worksheet to help you calculate your max loan amount). The good news is that once borrowers pay off their mortgage in full or sell their home, they can “restore” their entitlement to full value and take out another VA loan (upon lender approval). While not prohibitive, previously defaulting on a VA loan may affect your ability to obtain a new VA loan as well as impact entitlement amount.****
VA loan types
VA purchase loan
VA cash-out refinance
VA streamline refinance
VA renovation and rehab loans
VA construction loan
VA funding fee
To obtain a VA home loan, a VA funding fee will most likely be necessary. The fee helps cover administrative costs and sustainability of the VA loan program, and applies to standard VA purchase loans as well as VA refinance, renovation loans and construction loans. There are some exceptions, however, mostly pertaining to disability (see below).
Typically, you’ll have the option of paying for the funding fee at closing or financing it as part of your mortgage and paying it off over the life of your loan. For 2023, the VA funding fee is 2.15% of the amount borrowed; this increases to 3.3% for borrowers who have previously used the VA loan program.
How to reduce your funding fee
Funding fees can be reduced if down payments are provided. For example, for Veterans, active-duty service members, and National Guard and Reserve members a down payment of at least 5% can reduce the VA funding fee to 1.5%. Increase the down payment to 10% or more and eligible borrowers can further reduce their fee to 1.25% of the loan’s cost. Always check with your lender or the VA for the most up-to-date details.
Disability exemptions
Understandably, many service members who apply for a VA loan are exempt from paying the funding fee due to a disability they incurred while serving.
According to the VA, If any of the following pertains to your time in service, you are exempt from paying the VA funding fee:
- You’re receiving or are eligible to receive VA compensation for a service-connected disability, or
- You’re a service member with a disability rating greater than 10%, or
- You’re a service member on active duty who’s received the Purple Heart, or
- You’re the surviving spouse of a Veteran who died in service or from a service-connected disability, or who was totally disabled, and you're receiving Dependency and Indemnity Compensation.
Additionally, you may be eligible for a funding fee refund if you are later awarded VA compensation for a service-related disability. The effective date of your VA compensation must be retroactive to before the date of your loan closing.
Besides official documentation, the best way to know if you meet the 10% disability threshold is by talking to the helpful personnel at a VA regional loan center. They can be reached by calling (877) 827-3702.
VA jumbo loans
If you have your sights set on buying a home priced beyond the conforming loan limit in a high-cost metro area, you may be interested in securing a jumbo loan to help fund your purchase.
As a result of the Blue Water Act, fully entitled VA-related personnel are eligible to borrow in excess of conforming loan limits while still receiving the benefits of zero percent down payment options and competitive interest rates. As of 2021, the VA is willing to authorize home loans of up to $2 million dollars, although lenders may set their own limits. Additionally, given the increased level of risk, lenders will invariably require a higher minimum credit score and greater cash reserves in order to issue approval.
Even though there may be some additional requirements from your bank or mortgage company, approval requirements for a VA home loan above conforming loan limits will generally be more lenient than a conventional jumbo loan for the same amount. Importantly, if your COE states that you are fully-entitled, there will be no down payment required. This is potentially an area of tremendous up-front savings.
Applying for a VA home loan
To begin the process of applying for a VA home loan, you’ll want to take time to gather all your paperwork together as well as have your credit and personal finances ready for review.
Certificate of Eligibility (COE)
The first step necessary in the VA loan application process is to obtain your Certificate of Eligibility. This is done by logging on to the eBenefits section of VA website and identifying your eligibility status (veteran, active duty, eligible spouse, etc.). Reach out to a Rate Mortgage Specialist today to request your COE. Our mortgage specialists can access the VA portal and receive your COE in seconds.
The COE is essential in determining your eligibility and ensuring your entitlement is up to date and accurate. Lenders will ask for the COE right at the beginning of the process, and many will help you obtain it via the ACE online portal.
Lender
To avoid delay or miscommunication, you’ll want to work with a lender whose loan officers are knowledgeable and familiar with the minutiae of obtaining a VA home loan. They should have an understanding of how to guide you from eligibility to processing to closing; answering questions, locking in optimal interest rates and providing a low-touch modern experience.
As a standard part of the process, your lender will request a VA appraisal to get an official estimate of the home you are seeking to purchase or refinance. This is a necessary step to not only make sure that purchase prices meets value, but to reassure homebuyers that the home is structurally sound and free of defects and health hazards.
Along with the appraisal, your lender will also examine your credit, recurring debt and income to determine if you’re a low-risk candidate for the loan. Once approval is issued and it’s clear the loan is going forward, a good lender can also recommend a professional title company to help you close on the house.
VA loans vs. USDA and FHA loans
VA loans are just one type of federally backed loan available. The U.S. government also offers homebuyers access to low-interest home loans through USDA (United States Dept. of Agriculture) and FHA (Federal Housing Association). These loan types share many structural similarities with VA loans that enable lenders to offer affordable loans. However, they are all different. A few points of distinction are highlighted below:
VA loans are exclusively available to veterans, active duty service members and surviving spouses. FHA and USDA are open to all citizens (and for FHA, DACA recipients).
VA loans are exclusively available to veterans, active duty service members and surviving spouses. FHA and USDA are open to all citizens (and for FHA, DACA recipients).
VA does not set income limits. FHA loans are geared to first-time homebuyers and comes with flexible income.
VA does not set income limits. FHA loans are geared to first-time homebuyers and comes with flexible income.
VA and FHA loans allow you to live anywhere, but USDA loans are intended for individuals who want to live in designated rural and suburban areas.
VA and FHA loans allow you to live anywhere, but USDA loans are intended for individuals who want to live in designated rural and suburban areas.
VA does not require PMI. USDA and FHA loans require a modest amount of monthly mortgage insurance.
VA does not require PMI. USDA and FHA loans require a modest amount of monthly mortgage insurance.
VA and USDA typically ask for a credit score that meets minimum requirements. FHA has looser requirements and will regularly accept borrowers who meet minimum credit score requirements.
VA and USDA typically ask for a credit score that meets minimum requirements. FHA has looser requirements and will regularly accept borrowers who meet minimum credit score requirements.
VA and USDA loans do not require a down payment as long as other conditions are met. FHA loans must be accompanied by a 3.5% down payment option if your credit score meets requirements.
VA and USDA loans do not require a down payment as long as other conditions are met. FHA loans must be accompanied by a 3.5% down payment option if your credit score meets requirements.
This is not an exhaustive list. It’s prudent to check with your lender for a full rundown of how VA loans compare to both USDA and FHA loans. One thing is certain: Federally backed loans are more affordable and easier to secure than conventional loans.
VA loans vs. USDA and FHA loans
For eligible applicants, obtaining a VA loan can be a game-changer when it comes to buying a house. Not only is it relatively easy to qualify for in terms of credit, income and debt-to-income (DTI) ratio , but because it’s backed by the federal government, a VA loan can be secured without a down payment and with the benefit of a low interest rate.
Of course, not all VA-approved lenders offer the same superior level of customer satisfaction and loan expertise, so it’s wise to shop around and compare. When looking to buy or refinance, choose a lender that understands the unique complexities of VA home loans and can provide a secure, seamless digital experience. As a veteran, current service member or surviving spouse, you’ve earned the right to work with industry experts who understand your needs.
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More VA loan resources
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Top VA home loans articles
What are the current VA home loan requirements?
VA loans tend to offer lower rates and no down payment is required.
VA loan limits and changes
As of 2020, a new law eliminates VA loan limits for borrowers with full entitlement to VA loans.
What is a VA funding fee and how much do they cost?
See what VA funding fees are, their estimated price & other VA loan closing costs.
Who qualifies for a VA home loan? Requirements and eligibility
See VA loan qualifications & if you qualify for a VA mortgage.
1Waived $1,640.00 lender fee available for VA loans that have a triggered RESPA app date as of January 1, 2025. Offer is subject to termination without notice. This offer does not extend to Housing Finance Agency loans. ‘Triggered RESPA’ in accordance with Regulation X, is defined as lender receipt of all six pieces of information received in a secure format; applicant name, property address, home value, loan amount, income and SSN. Not all borrowers will be approved. Borrower’s interest rate will depend upon the specific characteristics of borrower’s loan transaction, credit profile and other criteria. Offer not available from any d/b/a or operations that do not operate under the Rate name. Restrictions apply.
Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture or any other government agency.
United Service Organizations, Inc. (USO) is a non-profit 501 (c)(3) organization (EIN/Tax ID: 13-1610451) and not part of the Department of Defence (DoD)
Rate cannot guarantee that an applicant will be approved or that a closing can occur within a specific timeframe. All dates are estimates and will vary based on all involved parties level of participation at any stage of the loan process. Contact Rate for more information.
2Source: Total Loan Volume for Guaranteed Rate Companies
*Using funds from a cash-out refinance to consolidate debt may result in the debt taking longer to pay off as it will be combined with the borrower's mortgage principal amount and will be paid off over the full loan term. Contact Rate for more information.
**Savings, if any, vary based on consumer’s credit profile, interest rate availability, and other factors. Contact Rate, Inc. for current rates. Restrictions apply.
***While the VA does not require a minimum credit score, participating lenders typically look for a minimum credit score starting at 640 for VA loan applicants.
****Note: Entitlement is a complex subject with mitigating circumstances. For a full review of all entitlement scenarios, including exceptions, borrowers should consult their lender or go here.
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Rate, Inc. does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Rate, Inc. Rate, Inc. its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
Guaranteed Rate, Inc. d/b/a/ Rate is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the Nevada Department of Veterans Services, the US Department of Agriculture, or any other government agency. No compensation can be received for advising or assisting another person with a matter relating to veterans’ benefits except as authorized under Title 38 of the United States Code.
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