What a VA loan covers

A VA loan covers the purchase price of a home up to the VA loan limit for your county. The limit varies by location — it is higher in expensive housing markets and lower in rural areas. In 2024, limits range from around $766,200 in most counties to over $1.1 million in high-cost areas like San Francisco and New York City. Your lender will tell you the exact limit for the county where you want to buy.

The loan itself covers only the home's purchase price, not closing costs, inspections, appraisals, or other fees. However, VA rules allow sellers to pay some or all of your closing costs as part of the sale agreement — this is a negotiating point, not something the loan covers directly. You can also roll certain costs into the loan amount if your lender permits it.

The VA does not set the interest rate or monthly payment. Your lender does. The VA's role is to may provide a portion of the loan to the lender, which typically means you can borrow with no down payment and without paying mortgage insurance — two major differences from conventional loans.

Key Takeaways

  • VA loans cover the home purchase price up to your county's limit, which ranges from roughly $766,200 to over $1.1 million depending on location.
  • Closing costs, appraisals, and inspections are not covered by the loan itself, but sellers often pay them as part of the sale negotiation.
  • You pay no down payment and no mortgage insurance, which are the main financial advantages of a VA loan over a conventional mortgage.
  • Your interest rate and monthly payment are set by your lender, not the VA, and will depend on your credit score and financial situation.
  • The VA may provide protects the lender, not you — it allows you to borrow without a down payment because the lender's risk is reduced.

How the VA loan limit works in your county

The VA loan limit is a ceiling, not a may provide. It means the VA will may provide the lender's loss up to that amount if you default. Your actual borrowing power depends on your income, credit score, and debt-to-income ratio — the same factors a conventional lender uses.

If you want to buy a home that costs more than your county's limit, you can still do it, but you will need to put down a down payment for the amount over the limit. For example, if your county limit is $766,200 and the home costs $850,000, you would need to cover the $83,800 difference out of pocket. Many lenders will let you borrow that extra amount as a conventional loan stacked on top of the VA loan, called a piggyback loan.

Your county limit resets if you sell the home and pay off the VA loan. If you keep the loan open but buy a second property, your remaining entitlement (the unused portion of your may provide) applies to the new purchase. The VA website has a county-by-county lookup tool where you can find your exact limit before you start house hunting.

What closing costs and fees the VA allows

The VA prohibits lenders from charging you certain fees — these are called non-allowable fees. You cannot be charged for the VA appraisal, the VA funding fee (unless you are exempt), processing, underwriting, document preparation, or loan origination fees. If a lender tries to charge you these, they are violating VA rules.

You can be charged for a title search, title insurance, recording fees, survey costs, homeowners insurance, property taxes, and HOA fees. These are standard real estate costs that exist whether you use a VA loan or not. Your lender will itemize all of these on your Closing Disclosure form at least three days before closing, so you will see exactly what you owe.

The VA funding fee is a one-time charge paid to the VA, not to the lender. It ranges from 1.4% to 3.6% of the loan amount depending on whether this is your first VA loan use and whether you are putting down any money. You can pay it upfront or roll it into the loan. Veterans with service-connected disabilities and surviving spouses are exempt from this fee.

Down payment requirements and what you save

VA loans require zero down payment. This is the single largest advantage over a conventional loan, which typically requires 3% to 20% down. On a $400,000 home, a conventional loan would require $12,000 to $80,000 upfront; a VA loan requires nothing.

You also do not pay private mortgage insurance (PMI), which conventional borrowers pay when they put down less than 20%. PMI typically costs 0.5% to 1% of the loan amount per year. Over a 30-year loan, that adds tens of thousands of dollars to your total cost. VA loans have no PMI, ever.

The tradeoff is the VA funding fee, which most borrowers pay. On a $400,000 first-time purchase with no money down, the funding fee is 2.3% — about $9,200. That is still far less than the PMI you would pay on a conventional loan over time, but it is a real cost you need to budget for or roll into the loan amount.

Loan limits for cash-out refinances and home improvement loans

If you already own a home with a VA loan and want to refinance to pull out cash, the new loan can be up to 100% of your home's current value, not just the original purchase price. This is called a cash-out refinance. You can use the cash for anything — home repairs, debt payoff, education, or other expenses. The new loan amount is limited only by your home's value and your ability to repay.

A VA home improvement loan is a separate product that lets you borrow up to $25,000 for repairs or improvements without refinancing your entire mortgage. This loan has a shorter term (usually 10 years) and a higher interest rate than a standard VA mortgage, but it is faster to close and does not require an appraisal.

Both of these products have their own rules and limits. Your lender can explain which option makes sense for your situation and what the actual monthly payment would be.

Income and debt limits that affect how much you can borrow

The VA does not set an income limit or a maximum debt-to-income ratio. However, your lender does. Most lenders will not approve you if your monthly debt payments (including the new mortgage) exceed 41% to 50% of your gross monthly income. Some lenders are stricter; some are more flexible.

Your credit score matters. Most lenders require a minimum score of 580 to 620, though some will go lower. A higher score gets you a lower interest rate. Your interest rate directly affects your monthly payment, so a 0.5% difference in rate can mean $150 to $200 more or less per month on a $400,000 loan.

If you have recent late payments, collections, or a bankruptcy, you may still may have access to, but you will face a waiting period and stricter terms. A bankruptcy discharge typically requires a two-year wait before you can use your VA loan benefit. A foreclosure or short sale usually requires three years.

How to find out your actual borrowing power

Your Certificate of may be able to access (COE) shows the VA your entitlement amount — the maximum may provide available to you. This is not the same as how much you can borrow. To find out your actual borrowing power, you need to talk to a lender.

Most VA lenders offer a free pre-qualification or pre-approval that takes 15 to 30 minutes. They will ask about your income, debts, credit score, and savings. They will then tell you the maximum loan amount they will approve and what your estimated monthly payment would be. This is not a binding offer, but it gives you a real number to work with when you start house hunting.

Pre-approval is different from pre-qualification. Pre-qualification is an estimate based on what you tell them. Pre-approval involves a credit check and verification of income and assets, so it carries more weight with sellers. If you are serious about buying, ask for pre-approval, not just pre-qualification.

Frequently Asked Questions

Can I use my VA loan to buy a condo or a manufactured home?

Yes, but the property must meet VA standards. The condo building must be VA-approved, which means it meets certain financial and structural requirements. Manufactured homes must be permanently affixed to land you own, not in a mobile home park. Your lender will verify that the property qualifies before you close.

What happens if the home appraises for less than the purchase price?

The VA appraisal is binding. If the home appraises below the purchase price, you have three options: renegotiate the price with the seller, pay the difference out of pocket, or walk away. The lender will not approve a loan for more than the appraised value, so one of these must happen before closing.

Can I use my VA loan to buy an investment property or rental home?

No. VA loans are for primary residences only — homes you intend to live in. You cannot use a VA loan to buy a second home, vacation home, or rental property. If you sell a home you bought with a VA loan and buy a new primary residence, you can use your entitlement again.

What if I have already used my VA loan benefit once?

You can use it again if you paid off the first loan and sold the home. Your entitlement restores to its full amount. If you still own the first home and the loan is still open, you can use your remaining entitlement to buy a second primary residence, but the VA may provide is split between the two loans.

Do I have to use a VA lender, or can any bank give me a VA loan?

Any lender licensed in your state can originate a VA loan, but not all do. Banks, credit unions, and mortgage companies all offer them. Shop around — interest rates and fees vary significantly between lenders, and a difference of 0.5% in rate can save or cost you tens of thousands over the life of the loan.