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Linda Bell is a senior writer on Bankrate's Home Lending team, producing content around HELOCs, financing home renovations, home equity loans and more.
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Suzanne De Vita is a senior editor on Bankrate’s Home Lending team, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters.
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If you’re a qualifying member of the military, a VA loan can help you buy a home with no down payment. These types of mortgages have more relaxed baseline requirements than conventional loans, and sometimes better interest rates, too. Here’s a comprehensive guide.
A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs (VA), specifically for eligible active-duty military, veterans and surviving spouses. If you qualify, you can use the VA loan program to buy a home, build or renovate a home or refinance to a new mortgage.
The VA doesn’t provide VA loans to borrowers directly. Instead, you’ll get your loan through a VA-approved mortgage lender. Many national banks offer VA loans, and there are lenders that specialize in them, too.
In most cases, borrowers don’t need to make a down payment to get a VA loan. You won’t need to pay mortgage insurance either — a key difference between VA loans and conventional and FHA loans. The latter require borrowers to pay mortgage insurance if putting down less than 20 percent.
You will need to pay the VA funding fee, however. Collectively, these fees allow the VA to guarantee VA loans, up to a certain amount. This guarantee lowers the risk lenders take on providing mortgages without a down payment. The funding fee ranges from 1.25 percent to 3.3 percent of the loan amount and applies whether you’re buying a home or refinancing (with some exceptions).
To be eligible for a VA loan, the VA imposes service requirements. Here’s an overview:
Before applying for a VA loan, you’ll need a certificate of eligibility, or COE, that proves you’ve satisfied the service requirements to qualify for the loan.
You can request a COE through the VA eBenefits portal online, by mail to your regional VA loan center or through your mortgage lender. Active-duty service members or current National Guard or Reserve members who haven’t ever been activated need a signed statement of service from a commander, adjutant or personnel officer. Veterans and current or former activated National Guard or Reserve members need to provide form DD214. There are separate requirements for discharged National Guard or Reserve members who were never activated, as well as surviving spouses. Visit the VA website here for more.
If you have full entitlement, there’s no limit on the size of your VA loan. However, your lender will still assess what you qualify for based on your finances — including income and other debt — and might impose its own loan limit. Your entitlement will still be pegged to conforming mortgage limits, as well.
You won’t have full entitlement if you have an active VA loan you’re still paying back; you paid a previous VA loan in full and still own the home; you refinanced your VA loan into a non-VA loan and still own the home; or you experienced a short sale, deed in lieu of foreclosure or foreclosure on a previous VA loan and didn’t fully repay it. In these cases, you’re restricted to borrowing only as much as the loan limit for your county.
For 2024, the limit in most counties is $766,550. In more expensive areas, that limit can go up to $1,149,825.
Lastly, you can only use a VA loan with a primary residence; investment properties and vacation homes aren’t allowed. The property also needs to meet certain safety and structural standards.
Learn more: VA loan requirements for 2024For those who are eligible, VA loans have many benefits, but they also have drawbacks to consider.
Whether purchasing or building a home or refinancing a mortgage, there are a variety of VA loan options:
| VA purchase mortgage | For buying a home |
| VA construction loan | For building a home, including buying the land or lot, labor and materials |
| Interest Rate Reduction Refinance Loan (IRRRL) or VA streamline refinance | For refinancing to a new loan with a new interest rate and/or terms, with no appraisal or credit check required |
| VA rate-and-term refinance | For refinancing to a new loan with a new interest rate and/or terms |
| VA cash-out refinance | For refinancing to a new, larger loan with a new interest rate and/or terms, with cash out based on the home’s equity |
| VA rehab/renovation loan | For buying and fixing up a home |
| Native American Direct loan (NADL) | For Native American veterans to buy, build or fix up a home (or refinance a mortgage on a home) located on federal trust land |
There are two main ways to refinance a VA loan: with an Interest Rate Reduction Refinance Loan (IRRRL), also known as a VA streamline refinance; or with a VA cash-out refinance.
The process of applying for a VA loan is similar to that of applying for other types of mortgages. It involves comparing offers from lenders, providing proof of employment and income and promptly responding to underwriting requests. Here are the basic steps for a VA purchase mortgage:
VA loans can have term lengths of 10 to 30 years, with a fixed or adjustable rate. VA loan interest rates vary from lender to lender and by borrower, but are sometimes lower than those on conventional mortgages.
Entitlement is the amount of the VA loan the VA will guarantee to the lender if you default. There are two types: basic entitlement, which is up to $36,000 for loans worth less than $144,000 or 25 percent for loans of that amount or more; and bonus entitlement, which is up to 25 percent of the Federal Housing Finance Agency (FHFA) loan limit, minus the basic entitlement. If you’re getting a loan that costs more than $144,000, the bonus entitlement can be used.
No, VA loans don’t require PMI (private mortgage insurance) or any other mortgage insurance. However, you will have to pay a funding fee.
Aside from standard closing costs, VA loans come with a funding fee (with a few exceptions). If you can’t pay the fee at closing, you can it to your loan and pay it over time with your mortgage. That increases the total amount you’re borrowing and the total interest paid. Here’s what you’ll pay:
| Down payment | First-time use | Subsequent use |
|---|---|---|
| 0%-5% | 2.15% | 3.30% |
| 5%-9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
If you’re struggling to pay your VA loan, the VA can help you find relief options with your mortgage lender or servicer. Call 877-827-3702 as soon as possible for assistance.
Andrew Dehan writes about real estate and personal finance. His work has been published by Rocket Mortgage, Forbes Advisor and Business Insider. He’s also a poet, musician and nature-lover. He lives in metro Detroit with his wife and children.
Arrow Right Senior writer, Home Lending
Linda Bell is a senior writer on Bankrate's Home Lending team, producing content around HELOCs, financing home renovations, home equity loans and more.
