For a comparison of all major mortgage types — conventional, FHA, VA, USDA, ARM, and jumbo — see the Mortgage Loan Types hub.
VA loans are one of the most powerful financial benefits available to veterans and active-duty service members. Zero down payment, no mortgage insurance, and rates typically 0.25–0.50% below conventional loans — yet many eligible borrowers either don’t know about them or use lenders that don’t specialize in VA lending.
Choosing the right VA lender matters more than with most loan types because VA loans have unique requirements around the Certificate of Eligibility (COE), VA appraisals, and the funding fee. This guide covers what to look for and how to get the best deal.
VA Loan Benefits at a Glance
| Feature | VA Loan | Conventional Loan | FHA Loan |
|---|---|---|---|
| Down payment | 0% | 3–20% | 3.5–10% |
| Mortgage insurance | None (VA funding fee instead) | PMI until 20% equity | MIP for life of loan |
| Interest rates | Lowest available | Average | Below average |
| Credit score minimum | None (official); 580–620 (most lenders) | 620+ | 500–580 |
| Loan limits | None (full entitlement) | $766,550 conforming | $498,257–$1,149,825 |
| Closing cost limits | Seller can pay all closing costs + up to 4% in concessions | Seller can pay 3–9% depending on down payment | Seller can pay up to 6% |
| Assumable | Yes | Generally no | Yes |
| Prepayment penalty | None | Varies | None |
For current VA rates, see our VA loan rates page.
VA Funding Fee Breakdown (2026)
The VA funding fee replaces mortgage insurance. It’s a one-time fee that most borrowers roll into the loan balance.
First-Time VA Loan Use
| Down Payment | Regular Military | Reserves/National Guard |
|---|---|---|
| 0% down | 2.15% | 2.40% |
| 5–9.99% down | 1.50% | 1.75% |
| 10%+ down | 1.25% | 1.50% |
Subsequent VA Loan Use
| Down Payment | Regular Military | Reserves/National Guard |
|---|---|---|
| 0% down | 3.30% | 3.30% |
| 5–9.99% down | 1.50% | 1.75% |
| 10%+ down | 1.25% | 1.50% |
Funding Fee Exemptions
The VA funding fee is completely waived for:
- Veterans receiving VA disability compensation (any rating)
- Veterans who would be entitled to compensation but receive retirement or active-duty pay instead
- Surviving spouses of veterans who died in service or from service-connected disability
- Purple Heart recipients (as of 2020)
- Active-duty service members with a pre-discharge Purple Heart
Dollar impact: On a $350,000 loan with 0% down, the funding fee ranges from $7,525 (first use, regular military) to $11,550 (subsequent use). If you’re eligible for a waiver, that’s substantial savings.
VA Loan vs. Conventional: What Costs Less?
| Scenario ($350K Home) | VA Loan (0% Down) | Conventional (5% Down) | Conventional (20% Down) |
|---|---|---|---|
| Down payment | $0 | $17,500 | $70,000 |
| Funding fee / PMI upfront | $7,525 (funding fee) | $0 | $0 |
| Monthly mortgage insurance | $0 | $145/month PMI | $0 |
| Estimated interest rate | 6.00% | 6.35% | 6.25% |
| Monthly payment (P&I) | $2,098 | $2,074 | $1,724 |
| Total cost (first 5 years) | $133,405 | $137,190 | $173,440 (inc. $70K down) |
Bottom line: VA loans win on total out-of-pocket cost in almost every scenario, especially for borrowers who don’t have a large down payment saved. The funding fee is less than the cumulative cost of PMI, and VA rates are lower.
What Makes a Good VA Lender
| Quality | Why It Matters | What to Ask |
|---|---|---|
| VA loan volume | High-volume VA lenders have streamlined processes and fewer delays | “What percentage of your loans are VA?” |
| COE experience | They should obtain your Certificate of Eligibility quickly, or help with entitlement questions | “Can you help me obtain my COE?” |
| No origination fee or low fee | VA allows up to 1% origination; some charge 0% | “What is your origination fee on VA loans?” |
| VA appraisal knowledge | VA appraisals have different standards; lender should know how to handle issues | “What happens if the VA appraisal comes in low?” |
| Funding fee handling | Should know exemptions and calculate correctly | “Are you familiar with funding fee exemptions?” |
| IRRRL experience | VA Interest Rate Reduction Refinance Loan is streamlined; not all lenders do them well | “Do you offer VA IRRRL refinancing?” |
| Military culture | Understanding of PCS moves, BAH, deployment, etc. | Check if lender has dedicated military division |
VA Appraisal Process
VA appraisals serve two purposes: determining market value and verifying the property meets VA Minimum Property Requirements (MPRs). They’re slightly more involved than conventional appraisals.
| Aspect | VA Appraisal | Conventional Appraisal |
|---|---|---|
| Cost | $500–$1,000 | $400–$700 |
| Timeline | 10–15 business days (can vary by region) | 5–10 business days |
| Property standards | Must meet VA MPRs | Lender discretion |
| Stays with property | Yes (for 6 months — any VA buyer can use it) | No (tied to borrower) |
| Repair requirements | Must be addressed before closing | Flexible |
| Can buyer waive? | No | Possible in some cases |
Common VA Appraisal Issues
| Issue | How to Handle | Potential Impact |
|---|---|---|
| Appraised value below purchase price | Negotiate lower price, make up difference in cash, or invoke VA escape clause | Delay or deal collapse |
| Peeling paint (pre-1978 homes) | Seller must repair | Minor delay |
| Non-functioning systems (HVAC, plumbing) | Seller must repair or provide escrow for repair | Moderate delay |
| Roof with < 3 years life remaining | Seller must repair or replace | Significant cost/delay |
| Pest damage (termites) | Treatment required; structural assessment if severe | Moderate to significant |
Tip: If the appraisal comes in below the purchase price, you have the right to walk away with no penalty under the VA escape clause. Never waive this protection.
VA Loan Eligibility Requirements
| Service Type | Minimum Service Requirement | COE Needed |
|---|---|---|
| Active duty (wartime) | 90 consecutive days | DD-214 |
| Active duty (peacetime) | 181 consecutive days | DD-214 |
| Currently active duty | 90+ days served | Statement of service |
| National Guard | 90 days of active duty OR 6 years of service | DD-214 or NGB-22 |
| Reserves | 90 days of active duty OR 6 years of service | DD-214 or discharge/retirement orders |
| Surviving spouse | Unremarried (or remarried after age 57) | VA Form 26-1817 |
How to Get Your Certificate of Eligibility (COE)
- Online through VA.gov — Fastest option if your records are in the VA system. Takes minutes.
- Through your lender — Most VA lenders can pull your COE electronically via the Web LGY system. Takes minutes.
- By mail — Submit VA Form 26-1880 with service records. Takes 4–6 weeks.
Your lender should be able to obtain your COE as part of the preapproval process.
VA Loan Entitlement Explained
Entitlement is the amount the VA will guarantee to lenders (up to 25% of the loan amount). Here’s how it works at a practical level.
| Situation | Entitlement Status | Loan Limit (0% Down) |
|---|---|---|
| Never used VA loan | Full entitlement | No limit |
| Used VA loan, sold home, paid off loan | Full entitlement (restored) | No limit |
| Currently have VA loan, want second | Remaining entitlement | Based on remaining entitlement |
| Had VA loan foreclosure | Reduced entitlement | May be limited |
Bottom line for most veterans: If you’ve never used a VA loan, or you sold your previous VA-financed home, you have full entitlement and can borrow any amount a lender will approve with 0% down.
VA IRRRL: Streamline Refinance
If you already have a VA loan, the Interest Rate Reduction Refinance Loan (IRRRL) is the fastest, simplest way to lower your rate.
| Feature | VA IRRRL | Standard VA Refinance |
|---|---|---|
| Appraisal required | No | Yes |
| Income verification | No | Yes |
| Credit check | Minimal | Full |
| Funding fee | 0.50% | 2.15–3.30% |
| Closing costs | Can be rolled into loan | Can be rolled into loan |
| Net tangible benefit required | Yes — must lower rate or switch from ARM to fixed | No |
| Minimum time in current loan | 210 days, 6+ payments | Varies |
The IRRRL is particularly valuable when interest rates drop. With no appraisal or income verification, it’s one of the fastest refinance options available.
How to Get the Best VA Loan Rate
- Compare at least 3 VA-experienced lenders — Include USAA, Navy Federal, PenFed, and at least one large VA lender like Veterans United or NBKC.
- Check if you’re exempt from the funding fee — If you have any VA disability rating, you save thousands.
- Ask about rate match or military discounts — Some lenders offer rate discounts for active-duty members or veterans.
- Consider a slightly higher rate for lender credits — If you’re short on cash, lender credits can cover closing costs.
- Don’t assume your bank is competitive — Big banks often have higher VA rates than military-focused lenders.
- Check BAH coverage — Your Basic Allowance for Housing should cover most or all of your mortgage payment. Use this to size your loan.
The Bottom Line
VA loans are the best mortgage product available in the U.S. — 0% down payment, no mortgage insurance, and the lowest available rates. The key is finding a lender that specializes in VA lending and understands the nuances of COE, VA appraisals, and funding fee exemptions.
Start the process by obtaining your Certificate of Eligibility, then get preapproved by at least 3 VA-experienced lenders. The rate and fee differences between VA lenders are often larger than with conventional loans, so shopping pays off even more.
Related resources:
- VA Loan Guide — Complete guide to VA loan requirements and benefits
- VA Loan Rates — Current rates updated weekly
- Best Mortgage Lenders — Compare all lender types
- How Much House Can I Afford?
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy