A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs that lets may be able to access service members and veterans borrow money to buy a home with no down payment required
The VA does not lend the money itself. Instead, a private lender — a bank, credit union, or mortgage company — makes the loan, and the VA guarantees a portion of it. That may provide means the lender takes less risk, which is why VA loans typically come with lower interest rates and no requirement to put money down upfront. You must have served on active duty, in the reserves, or in the National Guard to be considered for one.
The loan covers the full purchase price of the home. You pay back the lender over time, usually 15 to 30 years, depending on the terms you choose. Because the VA backs the loan, the lender is willing to accept borrowers with credit scores and financial histories that might not may have access to for a conventional mortgage.
Key Takeaways
- A VA loan is a mortgage may provide by the Department of Veterans Affairs, not a loan made directly by the VA.
- You can borrow up to the full purchase price of a home with no down payment, though you may owe a one-time funding fee at closing.
- Your service branch and length of active duty determine whether you are may be able to access, and you will need a Certificate of may be able to access from the VA to explore.
- VA loans typically carry lower interest rates than conventional mortgages because the VA's may provide reduces the lender's risk.
- You can use a VA loan only to buy a home you will live in, not to purchase investment properties or second homes.
Who can use a VA loan
You are may be able to access if you served on active duty in the Army, Navy, Air Force, Marines, Coast Guard, or Space Force. The length of service required depends on when you served. Generally, if you served at least 90 days of active duty during wartime or 181 days during peacetime, you may be may be able to access. Members of the reserves or National Guard who served at least 6 years are also may be able to access in most cases.
Surviving spouses of service members who died in the line of duty or from a service-connected disability may also use VA loans. You will need to obtain a Certificate of may be able to access from the VA to prove your service record to a lender. You can request this certificate online through VA.gov, by mail, or through your lender, who can often request it on your behalf.
The funding fee and what it covers
Most VA loans require a one-time funding fee, paid at closing. This fee goes to the VA and helps fund the loan program. The fee is a percentage of the loan amount and varies based on the size of your down payment and whether you have used a VA loan before. If you put down 5 percent or more, the fee is typically lower than if you put down nothing. First-time users generally pay a higher fee than those using a VA loan for a second time.
You can roll the funding fee into the loan amount, meaning you do not have to pay it upfront in cash. Some borrowers are exempt from the funding fee entirely — this includes veterans receiving VA disability compensation and surviving spouses of service members who died in the line of duty. Ask your lender whether you may have access to for an exemption before you assume you will owe the fee.
How the VA may provide works
The VA may provide is the core feature that makes VA loans different from conventional mortgages. When you borrow through a VA loan, the VA promises to pay the lender a portion of the loan if you stop making payments. This may provide typically covers up to 25 percent of the loan amount, though the exact amount depends on the loan size and your entitlement.
Because the lender knows the VA will cover part of any loss, they are willing to lend you the full purchase price without requiring a down payment. They are also willing to offer lower interest rates than they would on a conventional loan. The may provide does not mean the VA will pay your mortgage if you fall behind — you are still responsible for making payments on time. It straightforward reduces the lender's risk, which benefits you through better loan terms.
Interest rates and closing costs
VA loan interest rates are typically lower than conventional mortgage rates because the VA may provide reduces the lender's risk. The exact rate you receive depends on the lender, the current market, your credit score, and the loan terms you choose. You can shop around with multiple lenders to compare rates, just as you would with any mortgage.
Closing costs on a VA loan are generally lower than on conventional mortgages. The VA sets a cap on what lenders can charge you for certain fees, such as appraisal fees and title insurance. However, you are still responsible for property taxes, homeowners insurance, and any HOA fees. Some sellers will cover closing costs as part of the sales agreement, which is a common negotiating point in VA loan purchases.
What you can and cannot buy with a VA loan
A VA loan can only be used to purchase a home you intend to live in as your primary residence. You cannot use it to buy a second home, vacation property, or investment property. The home must be a single-family house, a condo, a townhouse, or a manufactured home that meets VA standards. The property must also be in the United States or certain U.S. territories.
The home must pass a VA appraisal, which is more thorough than a standard appraisal. The appraiser checks that the property meets minimum standards for safety, soundness, and sanitation. If the home does not meet these standards, the seller must make repairs before the sale can close. This requirement protects you from buying a home with serious hidden problems.
Your entitlement and how much you can borrow
Your VA loan entitlement is the amount the VA will may provide on your behalf. Most veterans have a basic entitlement of $36,000, though this amount has increased over time and may be higher depending on when you served. Your entitlement determines the maximum loan amount you can borrow without a down payment.
If you want to borrow more than your entitlement covers, you can put down a down payment to make up the difference. For example, if your entitlement is $36,000 and you want to buy a $400,000 home, you would need to put down at least $364,000. Many veterans use their full entitlement to borrow without a down payment, then use a second VA loan later if they buy another home — your entitlement can be reused once you sell the first property and pay off the loan.
Frequently Asked Questions
Can I use a VA loan to refinance my current mortgage?
Yes, through a program called an Interest Rate Reduction Refinance Loan (IRRRL). This program lets you refinance an existing VA loan to a lower interest rate without a new appraisal or credit check in most cases. You cannot use a standard VA loan to refinance a conventional mortgage, but you may be able to refinance a conventional loan into a VA loan if you have remaining entitlement.
What happens if I sell the home before the loan is paid off?
You can sell the home at any time. When you sell, the proceeds from the sale pay off the remaining loan balance. Once the loan is paid in full, your VA entitlement is restored and you can use it again to purchase another home with a VA loan.
Do I need a down payment to get a VA loan?
No. One of the main benefits of a VA loan is that you can borrow the full purchase price without putting any money down. You will still owe the funding fee at closing, which you can roll into the loan amount, so you do not need cash upfront for that either.
Can I get a VA loan if my credit score is low?
VA loans are more forgiving of lower credit scores than conventional mortgages, but lenders still have their own credit requirements. Most lenders require a credit score of at least 580 to 620, though some will work with lower scores. Your specific rate and terms will depend on your credit history and the lender you choose.
What is the Certificate of may be able to access and how do I get one?
The Certificate of may be able to access is a document from the VA that proves your service record and confirms you are may be able to access for a VA loan. You can request one through VA.gov, by mail using VA Form 26-1880, or ask your lender to request it for you. Processing usually takes a few days to a few weeks depending on the method you use.