VA loans let you buy a home with no down payment and no mortgage insurance

A VA loan is a mortgage backed by the Department of Veterans Affairs. The VA does not lend the money itself — a bank or mortgage lender does. What the VA does is may provide part of the loan, which means if you stop paying, the VA covers the lender's loss up to a set amount. Because the lender's risk is lower, they offer terms you will not find elsewhere: no down payment required, no private mortgage insurance (PMI), and often a lower interest rate than conventional mortgages.

To use a VA loan, you must have served on active duty, in the National Guard, or in the Reserves, and you must have received a discharge that was not dishonorable. The VA issues you a Certificate of may be able to access that proves your service record. You bring this certificate to a lender, who uses it to structure the loan and submit it to the VA for approval.

The process moves faster than a conventional mortgage because the VA may provide removes much of the lender's underwriting burden. Most VA loans close in 30 to 45 days, though this varies by lender and how quickly you provide documents.

Key Takeaways

  • You need a Certificate of may be able to access from the VA, which you can request online through VA.gov or by mail, before you contact a lender.
  • VA loans require no down payment and no mortgage insurance, but you will pay a one-time VA funding fee (usually 2 to 3.6 percent of the loan amount) unless you are exempt.
  • The VA guarantees only a portion of the loan — typically up to $647,200 in 2024, though this amount changes yearly — so lenders still review your income, credit, and debt.
  • You must occupy the home as your primary residence; VA loans cannot be used for investment properties or vacation homes.
  • The VA does not set interest rates or approve loans — your lender does — so shopping around for the best rate and terms is worth your time.

Getting your Certificate of may be able to access

Before you contact a lender, you need proof that the VA considers you may be able to access. This proof is the Certificate of may be able to access, a one-page document that shows your service dates and discharge status.

You can request it online through VA.gov using your login credentials (DS Login, My HealtheVet, or ID.me). The online request takes about 10 minutes and you receive the certificate by email within minutes or a few hours. You can also request it by mail using VA Form 26-1880, which takes 7 to 10 days. If you are applying for your first VA loan, the online route is faster.

If you are still on active duty or in the Reserves, you can request the certificate using your service number and expected discharge date. The VA will issue it before your discharge is final.

What the VA funding fee covers and who pays it

The VA funding fee is a one-time charge that compensates the VA for the risk it takes by guaranteeing your loan. It is not an interest rate or an insurance premium — it is a flat fee calculated as a percentage of the loan amount and added to your mortgage balance.

For a first-time VA loan on a home purchase, the funding fee is usually 2.3 percent of the loan amount. If you have used a VA loan before, it rises to 3.6 percent. If you are putting down money (which is optional), the fee drops: 1.65 percent for first-time users with a down payment of at least 5 percent, and 1.25 percent with 10 percent down.

You are exempt from the funding fee if you receive VA disability compensation, if you are may be able to access for disability compensation but have not yet filed, or if you are a surviving spouse of a service member who died in service or from a service-connected disability. Bring documentation of your disability rating or your discharge papers to your lender so they can waive the fee.

The funding fee is rolled into your loan, so you do not pay it upfront. On a $300,000 loan with a 2.3 percent fee, the fee adds $6,900 to your mortgage balance.

How the VA may provide works and what it means for your loan

The VA may provide is not a loan approval — it is a promise to the lender. The VA says: "If this borrower defaults, we will pay you back up to this amount." The amount the VA guarantees is called the entitlement, and it changes yearly. For 2024, the basic entitlement is $36,000, which means the VA will cover up to $36,000 of your loan if you default.

Because of this may provide, lenders can offer VA loans with no down payment. On a $400,000 home, a conventional lender would require 10 to 20 percent down ($40,000 to $80,000). A VA lender does not, because the VA may provide covers part of the risk.

However, the VA may provide does not mean the lender will approve you automatically. Your lender still reviews your credit score, your income, your existing debts, and your employment history. Most VA lenders want a credit score of at least 620, though some accept lower scores. They also calculate your debt-to-income ratio — the percentage of your monthly income that goes to debt payments — and most want this to be 41 percent or lower.

If you have had financial trouble in the past — late payments, collections, or a foreclosure — the lender will ask about it. The VA does not require a minimum credit score, but individual lenders do, and those standards vary.

The appraisal and the VA's property requirements

When you make an offer on a home, your lender orders an appraisal to confirm the home is worth what you are paying. The VA also requires that the property meet certain standards: the home must be safe, sanitary, and structurally sound. This is called the VA property appraisal, and it is stricter than a conventional appraisal.

The appraiser checks for things like working plumbing, heating, and electrical systems; a sound roof; and no evidence of major structural damage or pest infestation. If the home fails inspection, the seller must make repairs before the sale closes, or you can walk away without penalty.

This requirement protects you: you are not financing a home with hidden problems. It also means some older homes or fixer-uppers may not pass VA inspection, which can limit your options in certain markets.

Interest rates, closing costs, and what you actually pay

The VA does not set interest rates. Your lender does, based on market conditions, your credit score, and the loan terms you choose. Because the VA may provide reduces the lender's risk, VA interest rates are often lower than conventional rates — sometimes by 0.5 to 1 percent — but you should shop around with multiple lenders to find the best rate.

Closing costs on a VA loan are lower than on a conventional mortgage because you are not paying for PMI and the lender's risk is lower. However, you will still pay for the appraisal, title search, title insurance, and recording fees. The VA limits what the seller can charge you for closing costs: the seller can pay for some of your costs, but you cannot be charged more than 1 percent of the loan amount in non-recurring closing costs (costs that do not repeat if you refinance).

The funding fee is the largest single cost, but it is rolled into your loan so you do not pay it at closing. On a $300,000 loan, your total out-of-pocket costs at closing might be $500 to $2,000, depending on your lender and local fees.

Occupancy requirements and what you can and cannot do with a VA loan

The VA requires that you occupy the home as your primary residence within 60 days of closing. You cannot use a VA loan to buy an investment property, a vacation home, or a rental property. If you buy a home with a VA loan and then move away without occupying it, you are in violation of the loan terms and the lender can call the loan due.

However, once you have lived in the home for the required period, you can move and rent it out. The loan does not prevent you from becoming a landlord later — it only requires that you live there first.

You can also use a VA loan to buy a multi-unit property (up to four units) as long as you occupy one of the units as your primary residence. This allows you to buy a duplex or triplex and live in one unit while renting out the others.

Frequently Asked Questions

Can I use a VA loan more than once?

Yes. Once you pay off a VA loan, your entitlement is restored and you can use it again. You can also use it while you still owe on a previous VA loan if you have enough entitlement remaining. For example, if your basic entitlement is $36,000 and you used $30,000 on your first home, you have $6,000 left to use on a second home.

What happens if I cannot pay my VA loan?

Contact your lender immediately. Many lenders offer forbearance (a pause on payments) or loan modification (a change to the terms) if you are facing hardship. The VA also has a Loan Guaranty program that can help you avoid foreclosure. Do not ignore missed payments — the sooner you reach out, the more options you have.

Can I refinance a VA loan into a conventional mortgage?

Yes, though there is usually no reason to. VA loans have lower rates and no PMI, so refinancing to a conventional loan typically costs you more. However, if you want to remove the occupancy requirement or access cash, refinancing may make sense. Talk to your lender about the costs and benefits.

Do I need a down payment to get a VA loan?

No. The VA may provide allows you to buy with zero down. However, putting down money (even 5 or 10 percent) lowers your funding fee and reduces the amount you finance, which can save you money over time.

What if my credit score is below 620?

The VA does not set a minimum credit score, but most lenders require at least 620. Some lenders work with lower scores, especially if you have a strong income and low debt. Contact VA lenders directly to ask about their credit requirements — they vary widely.