# VA loan

> A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs for eligible service members, veterans and some surviving spouses. Most borrowers can buy with no down payment and no mortgage insurance but pay a one-time funding fee.

Also called: VA mortgage, VA home loan. Topic: Mortgages and loans.

Because VA guarantees part of the loan, private lenders can offer eligible borrowers a mortgage with no [down payment](https://brokerandagent.com/glossary#down-payment) and no monthly mortgage insurance. Most borrowers pay a one-time fee instead.

## Who qualifies for a VA loan?

Eligibility comes from military service: veterans, active-duty service members, National Guard and Reserve members who meet the service requirements, and some surviving spouses. You show it with a Certificate of Eligibility, which your lender can usually request for you.

You have to plan to live in the home as your primary residence, and you still need to meet the lender’s standards for credit, income and debt. VA’s underwriting rules set 41% as the standard [debt-to-income ratio](https://brokerandagent.com/glossary/debt-to-income-ratio) and weigh it alongside residual income, the money left each month after major expenses. Missing one standard doesn’t automatically disqualify you.

## Do you need a down payment?

Usually not. VA says you can buy with no down payment as long as the price isn’t higher than the appraised value. If you have full entitlement, VA sets no loan limit: you can borrow what a lender will approve and the [appraisal](https://brokerandagent.com/glossary#appraisal) supports.

If part of your entitlement is still tied up in another VA loan, a limit based on your county applies, and you may need a down payment to borrow above it.

## What does the VA funding fee cost?

Instead of monthly mortgage insurance, most borrowers pay a one-time [VA funding fee](https://brokerandagent.com/glossary#va-funding-fee). On a purchase, a first-time user pays 2.15% of the loan with less than 5% down, 1.5% with 5% to under 10% down, and 1.25% with 10% or more. After the first use, the under-5% rate rises to 3.3%; the others stay the same.

You can pay the fee at closing or add it to the loan. Veterans who receive VA compensation for a service-connected disability don’t pay it, and neither do some surviving spouses or active-duty Purple Heart recipients.

## What else is different about VA loans?

VA says borrowers face fewer [closing costs](https://brokerandagent.com/glossary/closing-costs), and the seller may pay some of them. A VA loan has no [private mortgage insurance](https://brokerandagent.com/glossary/private-mortgage-insurance). The home gets a VA appraisal, which also checks that it meets VA’s minimum property requirements.

VA loans can be taken over by a qualified buyer as an [assumable mortgage](https://brokerandagent.com/glossary#assumable-mortgage), which can matter when rates have risen. Rates and lender fees still vary, so collect more than one [Loan Estimate](https://brokerandagent.com/glossary/loan-estimate).

## The funding fee on a $400,000 home with no down payment

| | |
| --- | --- |
| Purchase price | $400,000 |
| Down payment | $0 |
| Base loan amount | $400,000 |
| Funding fee, first use (2.15%) | $8,600 |
| Loan with the fee added | $408,600 |
| Funding fee, later use (3.3%) | $13,200 |
| Funding fee with VA disability compensation | $0 |

With 10% down ($40,000), the first-use fee would be 1.25% of a $360,000 loan, or $4,500.

## Common mistakes

- Assuming there’s a VA loan limit when you have full entitlement.
- Thinking the benefit can be used only once.
- Not checking whether you’re exempt from the funding fee before closing.
- Assuming every lender has the same credit requirements for VA loans.

## Questions

### Can you use a VA loan more than once?

Yes. Eligibility can be restored after you pay off a VA loan, and you may have entitlement left even while one is open. The funding fee is usually higher after the first use.

### Do VA loans have PMI?

No. VA loans have no private mortgage insurance or monthly mortgage insurance premium. Most borrowers pay the one-time funding fee instead.

### Is there a minimum credit score for a VA loan?

Lenders set their own credit standards for VA loans, so the minimum depends on the lender. Ask several, since requirements differ.

Calculator: [Mortgage calculator](https://brokerandagent.com/tools/mortgage-calculator)

## Related terms

- [VA funding fee](https://brokerandagent.com/glossary#va-funding-fee): The VA funding fee is a one-time charge on most VA loans, from 1.25% to 3.3% of the loan on a purchase, depending on the down payment and prior use. It can be financed, and veterans receiving VA disability compensation are exempt.
- [FHA loan](https://brokerandagent.com/glossary/fha-loan): An FHA loan is a mortgage insured by the Federal Housing Administration that allows as little as 3.5% down with a credit score of 580 or higher. Borrowers pay an upfront and an annual mortgage insurance premium.
- [USDA loan](https://brokerandagent.com/glossary#usda-loan): A USDA loan is a mortgage backed by the U.S. Department of Agriculture’s rural housing program for homes in eligible rural and some suburban areas. It can require no down payment, but household income limits apply.
- [Down payment](https://brokerandagent.com/glossary#down-payment): A down payment is the part of a home’s price you pay in cash at closing instead of borrowing. It’s usually stated as a percentage of the price, and less than 20% down on a conventional loan typically means paying mortgage insurance.
- [Assumable mortgage](https://brokerandagent.com/glossary#assumable-mortgage): An assumable mortgage is one a buyer can take over from the seller, keeping its interest rate and remaining balance. FHA, VA and USDA loans are generally assumable with lender approval; most conventional loans aren’t.

## Sources

- [VA: Funding fee and closing costs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/)
- [VA: Purchase loan](https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/)
- [VA: Loan limits](https://www.va.gov/housing-assistance/home-loans/loan-limits/)
- [38 CFR 36.4340: VA underwriting standards](https://www.law.cornell.edu/cfr/text/38/36.4340)
- [CFPB: What is a VA loan?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-va-loan-en-113/)

Checked 2026-10-02 by the Broker & Agent team. General information, not legal, tax or lending advice.

Source: https://brokerandagent.com/glossary/va-loan