VA Loan Guide
🏠 What is a VA Loan?
A VA loan is a government-backed mortgage offered by private lenders and guaranteed by the U.S. Department of Veterans Affairs (VA). It is available exclusively to:
- Active-duty service members
- Veterans
- Eligible surviving spouses
VA loans are designed to make homeownership more affordable for those who have served.
🔑 Key Features of VA Loans
| Feature | Details |
|---|---|
| Down Payment | 0% (no down payment required) |
| Credit Score | No official minimum (lenders usually want 620+) |
| Loan Limits | No max loan limit (as of 2020), but lenders may cap based on credit |
| Funding Fee | Required (can be financed); waived for some |
| Mortgage Insurance | No monthly PMI required |
| Occupancy Requirement | Must be primary residence |
| Eligible Properties | Single-family, VA-approved condos, some multi-units |
📝 VA Loan Process (Step-by-Step)
-
Get Your Certificate of Eligibility (COE)
- Apply via VA.gov, through your lender, or by mail (VA Form 26-1880)
- Pre-Approval from VA-Approved Lender
-
House Shopping
- Ensure the home meets VA appraisal and livability standards
- Make Offer & Sign Purchase Agreement
- VA Appraisal + Underwriting
-
Closing
- Pay VA funding fee, closing costs, and sign documents
-
Move In
- You must occupy the home within a reasonable time after closing
✅ Advantages of VA Loans
| Advantage | Details |
|---|---|
| No Down Payment | 100% financing available |
| No Monthly PMI | Huge monthly savings compared to FHA or Conventional |
| Competitive Interest Rates | Often lower than FHA/Conventional |
| No Loan Limits | Borrow as much as the lender will approve |
| Flexible Credit Guidelines | Lenders may approve lower scores than with other loan types |
| Assumable Loan | Can be transferred to another qualified veteran (with VA approval) |
| Refinance Options | IRRRL (Interest Rate Reduction Refinance Loan) is fast and easy |
❌ Disadvantages of VA Loans
| Disadvantage | Details |
|---|---|
| VA Funding Fee | One-time fee (1.25% to 3.3%) unless exempt (disabled veterans) |
| Primary Residence Only | Can’t be used for second homes or investment properties |
| Property Standards | Must meet VA appraisal requirements, which may delay closing |
| Not All Lenders Offer VA Loans | Fewer lenders specialize in VA loans |
| Not All Sellers Accept VA Offers | Due to appraisal concerns or slower closing process |
💡 VA Funding Fee Breakdown
| Scenario | Funding Fee (2025) |
|---|---|
| First-time use, 0% down | 2.15% |
| First-time use, 5% down | 1.5% |
| Subsequent use, 0% down | 3.3% |
| Exemptions | 100% disabled veterans, Purple Heart recipients (active duty), surviving spouses |
Funding fee can be rolled into the loan.
🏦 VA vs FHA vs Conventional Loans
| Feature | VA | FHA | Conventional |
|---|---|---|---|
| Down Payment | 0% | 3.5% | 3–20% |
| Credit Score | ~620 (flexible) | 500–580+ | 620+ |
| PMI / MIP | ❌ None | ✅ Required | ✅ Required <20% down |
| Funding Fee | ✅ Yes (1.25–3.3%) | ✅ Upfront + annual | ❌ None (but PMI) |
| Loan Limit | No VA cap, but lender cap applies | Set by FHA per county | Up to $766,550 (standard) |
| Property Types | Primary residence only | Primary residence only | Primary, second home, investment |
| Appraisal | VA appraisal required | HUD appraisal | Standard appraisal |
| Who Qualifies | Veterans, military, spouses | Anyone | Anyone (with income/credit) |
📋 Who Should Consider a VA Loan?
✅ You are a Veteran, Active-Duty, or Qualified Spouse
✅ You want to avoid PMI and put 0% down
✅ You plan to live in the home as your primary residence
✅ You are looking for affordable interest rates
✅ You qualify for funding fee exemption (disability)
