If you've served in the military, you have access to what many consider the best mortgage program in America. VA loans, backed by the U.S. Department of Veterans Affairs, offer benefits that no other loan program can match: zero down payment, no mortgage insurance, competitive interest rates, and limits on closing costs. For eligible veterans, active-duty service members, and surviving spouses, there's rarely a reason to choose anything else.
The VA loan program was created in 1944 as part of the GI Bill to help returning World War II veterans purchase homes. Nearly 80 years later, it remains one of the most valuable benefits of military service—yet many eligible borrowers don't fully understand or utilize it.
The Extraordinary Benefits of VA Loans
The headline benefit is simple: no down payment required. While other programs require 3% to 20% down, VA allows you to finance 100% of the home's value. On a $400,000 home, that's $12,000 to $80,000 you don't need to save before buying. For many veterans, this eliminates the biggest barrier to homeownership entirely.
Just as significant: no private mortgage insurance. Other borrowers who put less than 20% down pay $100 to $300+ monthly in PMI. VA borrowers pay nothing—for the life of the loan. Over 30 years, this saves tens of thousands of dollars compared to FHA or low-down-payment conventional loans.
VA loans typically come with lower interest rates than comparable conventional loans. The VA guarantee reduces lender risk, and lenders pass some of that savings to borrowers. Even a quarter-point rate difference adds up to thousands over the loan term.
There are also limits on closing costs for VA borrowers. The VA restricts certain fees lenders can charge, and some costs that would fall on conventional borrowers must be paid by the seller in VA transactions. This keeps your out-of-pocket costs lower at closing.
Perhaps most overlooked: the VA loan benefit is reusable. You can use it multiple times throughout your life—buy a home, sell it, and use your benefit again for the next purchase. You can even have multiple VA loans simultaneously under certain circumstances.
Who's Eligible for a VA Loan?
Eligibility is based on your military service. Generally, you qualify if you've served:
90 consecutive days of active duty during wartime (including the period since September 11, 2001), or 181 days of active duty during peacetime. If you served less than these minimums, you may still qualify if you were discharged for a service-connected disability.
National Guard and Reserve members qualify after six years of service, or after 90 days of active-duty service under Title 10 orders (including deployments).
Surviving spouses of veterans who died in service or from service-connected disabilities may also be eligible, as long as they haven't remarried (with some exceptions for remarriage after age 57).
To prove eligibility, you'll need a Certificate of Eligibility (COE). Your lender can usually obtain this electronically in minutes through the VA's system. If not, you can request it through the VA's eBenefits portal or by mail using VA Form 26-1880.
The VA Funding Fee
VA loans have one cost other loans don't: the funding fee. This one-time charge helps fund the VA loan program so it can continue serving future veterans. The fee ranges from 1.25% to 3.3% of the loan amount, depending on your down payment and whether you've used the benefit before.
For first-time users with no down payment, the funding fee is 2.15%. Put 5% down and it drops to 1.5%; put 10% down and it's just 1.25%. Second and subsequent uses have higher fees—3.3% with no down payment—which is why some repeat users consider putting money down.
The funding fee can be rolled into your loan rather than paid at closing, which keeps your out-of-pocket costs low but increases your loan balance slightly.
Here's important news: veterans with service-connected disabilities are exempt from the funding fee entirely. Surviving spouses using the benefit are also exempt. If you have any VA disability rating, make sure your lender knows—you shouldn't pay this fee.
VA Loan Requirements
While VA loans are more accessible than conventional loans in many ways, you still need to meet certain standards:
The VA doesn't set a minimum credit score, but most lenders require at least 620. Some VA-specialized lenders go lower, but expect higher rates and more scrutiny. The higher your score, the better your terms.
Your debt-to-income ratio should generally be 41% or less, though the VA allows flexibility with compensating factors. Lenders also look at your residual income—the money left over after paying all debts and living expenses.
The property must be your primary residence—VA doesn't finance vacation homes or investment properties. However, like FHA, you can buy multi-unit properties (up to four units) if you live in one.
VA loans require a VA appraisal, which is slightly more rigorous than conventional appraisals. The appraiser checks that the property meets VA's Minimum Property Requirements (MPRs) for safety and habitability. Homes with significant deficiencies may require repairs before the VA loan can close.
Not all lenders are equally experienced with VA loans. Some charge higher rates or add unnecessary requirements. Work with a lender who specializes in VA loans and handles them regularly—they'll know how to navigate the process smoothly and ensure you get the benefits you've earned.