Quick answer
A VA loan is a mortgage from a private lender that the Department of Veterans Affairs partly guarantees. If you’re eligible, you can buy with 0% down as long as the price isn’t above the appraised value, and you pay no monthly mortgage insurance. Most borrowers pay a one-time funding fee instead — 2.15% of the loan on a first purchase with less than 5% down, 3.3% on later use — unless they’re exempt, for example because they receive VA disability compensation.
Key facts
0.5%
Funding fee on a VA streamline refinance (IRRRL)
U.S. Department of Veterans Affairs · Apr 7, 2023
How a VA loan works
The VA doesn’t usually lend the money. Banks, credit unions and mortgage companies make the loan, and the VA guarantees part of it, which means the lender recovers some of its loss if you default. That guarantee is why lenders can accept no down payment and skip mortgage insurance.
You must live in the home as your residence, the property must pass a VA appraisal, and you need a Certificate of Eligibility (COE), which your lender can usually request online. Interest rates, fees and credit standards come from the lender, within VA rules, so quotes differ from lender to lender.
Who is eligible
VA home loan benefits are available to veterans, active-duty service members, National Guard and Reserve members, and some surviving spouses. Eligibility depends on when and how long you served and on your discharge: the minimum active-duty service periods differ by era, and Guard and Reserve members qualify through Title 10 active duty or years in the Selected Reserve. The COE is the VA’s confirmation that you qualify and shows how much entitlement you have. A lender cannot close a VA loan without it.
VA loan requirements at a glance
| Requirement | VA rule |
|---|---|
| Down payment | 0% if the price is at or below the appraised value |
| Mortgage insurance | None, monthly or upfront |
| Funding fee | 1.25%–3.3% of the loan on a purchase unless exempt; can be financed |
| Credit | VA publishes no minimum score; lenders set their own standards |
| Debt-to-income | 41% guideline; higher ratios need documented compensating factors |
| Loan limit | None with full entitlement; based on your county’s conforming limit with remaining entitlement |
| Occupancy | You must live in the home |
| Seller concessions | Up to 4% of the home’s reasonable value; closing-cost credits not limited |
The VA funding fee
The funding fee is a one-time charge, set in federal law and published by the VA, that keeps the program running without monthly insurance. It depends on your down payment and on whether you have used the benefit before.
| Down payment | First use | After first use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% to under 10% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
A cash-out refinance costs 2.15% the first time and 3.3% after that, whatever your equity, and an Interest Rate Reduction Refinance Loan (IRRRL) costs 0.5%. You can pay the fee at closing or add it to the loan; on a purchase it is the only closing cost you can finance.
What a VA payment looks like
$360,000 home (near the US median value), smallest down payment on each loan, 30-year fixed at an example rate of 7.24%
| VA, first use | VA, later use | FHA, 3.5% down | |
|---|---|---|---|
| Cash down | $0 | $0 | $12,600 |
| Upfront fee, financed | $7,740 | $11,880 | $6,080 |
| Loan amount | $367,740 | $371,880 | $353,480 |
| Principal and interest | $2,506 | $2,534 | $2,409 |
| Monthly mortgage insurance | $0 | $0 | $159 |
| Total with tax and insurance | $2,920 | $2,948 | $2,982 |
Tax uses the national rate of 0.89% a year and insurance Freddie Mac’s average of $4.90 per $1,000 of value. A borrower exempt from the funding fee would borrow $360,000 and pay $2,453 a month in principal and interest.
Putting 10% down cuts the fee to 1.25% — $4,050 on this home instead of $7,740 — and lowers the loan, but many VA borrowers keep their cash for reserves and closing costs instead. Sellers can pay your closing costs, and the VA doesn’t limit those credits; other seller concessions are capped at 4% of the home’s reasonable value. The closing cost estimator shows what to budget in your state.
Entitlement and loan limits
Entitlement is the amount the VA will guarantee for you. On most loans the VA guarantees up to 25% of the loan amount, and lenders generally want that guarantee, a down payment, or both to cover 25% of the loan.
- Full entitlement — you’ve never used the benefit, or you had it restored, typically after selling the home and paying off the earlier VA loan. There is no VA loan limit; the lender still decides how much you can afford.
- Remaining entitlement — part of your entitlement is still tied up, for example in a VA loan you haven’t paid off. You may still be able to buy or refinance another home, but the guarantee is based on your county’s conforming loan limit, so a larger loan may need a down payment.
You can ask the VA to restore used entitlement through the same COE request. One option — restoring it after repaying a VA loan in full while keeping the home — can be used only once.
Debt-to-income and residual income
VA underwriting uses two tests. The debt-to-income guideline is 41%; above that, the lender must document compensating factors. The second test, residual income, checks how much money is left each month after the mortgage, taxes, other debts and living costs. The VA publishes minimums that vary by region, family size and loan amount. If your DTI is high, ask a lender to run both tests before you shop. Our debt-to-income guide explains the ratio.
Refinancing a VA loan
The IRRRL, or VA streamline refinance, swaps one VA loan for another at a lower rate with limited paperwork. You must have made 6 consecutive monthly payments and waited 210 days after the first payment due date; a fixed-to-fixed refinance must cut the rate by at least 0.5%, and the fees must be recouped within 36 months. A VA cash-out refinance can go up to 100% of the home’s value under VA rules, although lenders may set lower limits. See streamline refinances and cash-out refinancing.
When a VA loan isn’t the best fit
The funding fee for repeat users with little down is high, so a borrower with 20% down and strong credit may pay less with a conventional loan, which has no fee and no PMI at that level. VA loans also can’t be used for a pure investment property. For most eligible buyers with little cash, though, no down payment and no monthly mortgage insurance make VA hard to beat — the first-use example above costs less each month than an FHA loan with 3.5% down. Buyers in rural areas can also compare a zero-down USDA loan.
Frequently asked questions
How much is the VA funding fee?
On a purchase it is 2.15% of the loan for first use with less than 5% down and 3.3% for later use, falling to 1.5% with 5% down and 1.25% with 10% down. An IRRRL costs 0.5%.
Who is exempt from the VA funding fee?
Veterans receiving VA compensation for a service-connected disability (or eligible for it but receiving retirement or active-duty pay instead), surviving spouses receiving Dependency and Indemnity Compensation, service members with a pre-closing proposed or memorandum rating, and active-duty Purple Heart recipients.
Is there a VA loan limit in 2026?
Not if you have full entitlement — the lender decides how much you can afford. With remaining entitlement, your guarantee is based on your county’s conforming limit, which is $832,750 in most counties.
What credit score do you need for a VA loan?
The VA doesn’t publish a minimum score. You must meet both VA standards and your lender’s, and lenders set their own minimums, so it pays to ask more than one.
Do VA loans have PMI?
No. VA loans have no private mortgage insurance and no monthly mortgage insurance premium. The one-time funding fee replaces it, and some borrowers are exempt.
Can I use a VA loan more than once?
Yes. Entitlement can be restored, typically after you sell the home and pay off the VA loan, and even without restoration you may have remaining entitlement to buy another home. Later use costs a higher funding fee when you put less than 5% down.
Sources
- Freddie Mac Primary Mortgage Market Survey — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- US Census Bureau, American Community Survey 2024 1-year — Median value of owner-occupied homes (2024 ACS 1-year)
- US Census Bureau, American Community Survey 2024 1-year — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year)
- Freddie Mac Research — Average homeowners insurance premium per $1,000 of home value (2023 data)
- U.S. Department of Veterans Affairs — VA funding fee, first use, less than 5% down; VA funding fee, after first use, less than 5% down; VA funding fee, 10% or more down (Apr 7, 2023)
- CFPB — Minimum FHA down payment (Oct 28, 2026)
- HUD Mortgagee Letter 2023-05 — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023)
- U.S. Department of Veterans Affairs — VA purchase loan down payment (price at or below appraised value) (Jan 7, 2026)
- 38 CFR 36.4340 — VA debt-to-income guideline (higher ratios need documented compensating factors) (Oct 23, 2026)
- U.S. Department of Veterans Affairs — VA guaranty on loans above $144,000 (share of the loan amount) (Aug 12, 2025)
- 38 U.S.C. 3709 — VA IRRRL seasoning: consecutive monthly payments made; VA IRRRL seasoning: days after the first payment due date; VA IRRRL fixed-to-fixed: new rate at least this much lower (Oct 28, 2026)
- 38 CFR 36.4306 — VA refinance (including cash-out) maximum loan-to-value allowed by VA (Oct 22, 2026)
- FHFA — 2026 baseline conforming loan limit (one-unit) (2026 limit)
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.