VA Loan

· 4 min read
A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs that lets eligible service members, veterans, and surviving spouses buy a…

A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs that lets eligible service members, veterans, and surviving spouses buy a home with zero down payment, no PMI, and some of the lowest interest rates available anywhere. It’s arguably the single best mortgage product in America.

How VA Loans Work

The VA doesn’t lend money directly. Private lenders originate the loans, and the VA guarantees a portion (typically 25% of the loan amount). This guarantee lets lenders offer 100% financing without requiring mortgage insurance. The VA sets minimum property requirements and borrower eligibility, but individual lenders add their own credit score minimums (usually 580-620).

There’s no maximum loan amount for borrowers with full entitlement. You can buy a $2 million house with zero down if a lender will approve it. Borrowers with reduced entitlement (usually from a prior VA loan still outstanding) have county-based limits.

The Cost Impact

The VA funding fee is the main cost. It’s a one-time charge of 1.25-3.30% of the loan, depending on down payment and service type:

  • First use, zero down: 2.15% ($7,525 on a $350,000 loan)
  • Subsequent use, zero down: 3.30% ($11,550 on $350,000)
  • 5%+ down: 1.50% ($5,250 on $350,000)
  • 10%+ down: 1.25% ($4,375 on $350,000)

Veterans with service-connected disabilities are exempt from the funding fee entirely. That saves thousands.

Even with the funding fee, VA loans crush the competition on total cost. On a $350,000 purchase: a VA loan at 6.50% with the $7,525 fee rolled in costs about $2,257/month. A conventional loan at 6.75% with 5% down and PMI costs $2,384/month — and you had to come up with $17,500 for the down payment.

VA Loan Benefits Beyond Rate

VA loans have borrower protections that conventional loans lack. Lenders can’t charge a prepayment penalty. Closing costs are capped (sellers can pay up to 4% of the price in concessions). If you fall behind on payments, the VA has dedicated loss mitigation staff who work harder than typical servicers to keep you in the home.

The VA also limits what lenders can charge for origination (capped at 1% in many cases), which keeps closing costs lower across the board.

If you qualify for both programs, see our FHA vs. VA loan comparison to understand which saves you more.

Real-World Example

A veteran with a 680 credit score buys a $350,000 home using their VA loan benefit. They put $0 down and their rate is 6.25% — lower than the 6.75% a conventional borrower with the same credit score would receive. There is no PMI. The VA funding fee of 2.15% ($7,525) is rolled into the loan, bringing the total to $357,525. Monthly payment: $2,201 — compared to $2,365 for a conventional borrower with 5% down plus PMI on the same house. Over the first five years, the VA borrower saves approximately $9,840 in total payments.

Run the Numbers

Use our mortgage calculator to see how va loan applies to your specific situation. Plug in your numbers and compare scenarios before making any financial commitments.

Related Terms

Understanding va loan connects to several other concepts: FHA Loan, Conventional Loan, Down Payment, and Closing Costs. Each of these terms interacts with va loan in ways that affect your buying power, monthly costs, or investment returns.

Frequently Asked Questions

Can I use a VA loan more than once?

Yes. VA loan entitlement is reusable. Once you sell a home and pay off the VA loan, your full entitlement is restored. You can even have two VA loans simultaneously if you have enough remaining entitlement. This makes VA loans ideal for military families who relocate frequently — use it at every duty station.

Do VA loans require a minimum credit score?

The VA itself has no minimum credit score requirement. However, most lenders set their own minimums — typically 580-620 for approval, with better rates at 680+. If one lender says no, shop around. Different lenders have different overlays. Compare rates and terms on our loan comparison tool and use our mortgage calculator to see your projected payments.

Who qualifies for a VA loan?

Active-duty service members with 90 days of service during wartime (or 181 days during peacetime), veterans, National Guard and Reserve members with 6+ years of service, and surviving spouses of service members who died in the line of duty or from a service-connected disability. You need a Certificate of Eligibility (COE) from the VA.

Can I use a VA loan more than once?

Yes. VA loan entitlement can be restored once you sell the home and pay off the previous VA loan. Some veterans can even have two VA loans simultaneously if they have remaining entitlement. There is no limit on how many times you can use the VA loan benefit over your lifetime, though the funding fee increases slightly for subsequent use.