VA Loan

A VA loan is a mortgage backed by a partial guarantee from the US Department of Veterans Affairs, allowing approved private lenders to offer favorable terms to eligible borrowers. The VA does not lend directly — it guarantees a portion of the loan, protecting the lender against default. Eligibility requirements: (1) Active duty servicemembers: 90 continuous days of service; (2) Veterans: 90 days active duty during wartime, or 181 days during peacetime, with honorable discharge; (3) National Guard / Reserves: 6 years of service (or 90 days under Title 32 active duty after August 1, 1990); (4) Surviving spouses: unremarried spouse of a Veteran who died in service or from a service-connected disability. Obtain a Certificate of Eligibility (COE) from the VA to confirm your entitlement. Apply at VA.gov — How to apply for a VA home loan.

VA loans offer several significant advantages over conventional mortgages: (1) No down payment required: eligible borrowers can finance 100% of the purchase price; (2) No private mortgage insurance (PMI): even at 100% LTV, VA loans have no ongoing mortgage insurance premium — saving $100–$300+/month vs FHA or low-down-payment conventional; (3) Competitive rates: VA loans typically carry rates 0.25–0.50% below comparable conventional rates due to the government guarantee reducing lender risk; (4) Assumable: VA loans can be assumed by a qualified buyer (VA or non-VA) — a significant selling advantage if your rate is below current market; (5) No prepayment penalty; (6) Lenient credit standards: no FICO minimum from VA; most lenders apply a 620 overlay; (7) Foreclosure avoidance assistance: VA has dedicated loan technicians who help distressed borrowers avoid foreclosure. See VA loan eligibility 2027 for current requirements.

The VA funding fee is a one-time fee paid to the VA to sustain the loan guarantee program. It is not mortgage insurance — it is a government fee. The fee amount depends on loan type, down payment, and whether it is the borrower's first use of the VA benefit. For 2027 (projected): Purchase loans, first use, 0% down: 2.15%; Purchase loans, first use, 5–9% down: 1.5%; Purchase loans, first use, 10%+ down: 1.25%; Subsequent use, 0% down: 3.3%. The fee can be financed into the loan. Exemptions: Veterans with a service-connected disability rating of 10%+ are fully exempt from the funding fee. Surviving spouses of Veterans who died in service or from a service-connected disability are also exempt. Always confirm your exemption status before closing — an incorrect fee is difficult to recover after funding. Details at VA loan funding fee 2027.

For eligible Veterans with full entitlement (no outstanding VA loans), there is effectively no VA loan limit — the VA will guarantee any loan amount approved by the lender. The VA eliminated county loan limits for borrowers with full entitlement in 2020. However, lenders still apply their own maximum loan amounts, and VA "jumbo" loans (above the county conforming limit) may require a down payment: the VA covers 25% of the loan up to the county conforming limit; for amounts above that, the borrower pays 25% of the excess. Example: conforming limit is $806,500; VA purchase price is $1,000,000. Excess = $193,500; 25% = $48,375 down payment required. Veterans with reduced entitlement (active VA loan on another property) do have a reduced guarantee and loan limits may apply. Verify at the VA home loans portal.

Yes — VA entitlement can be restored and reused multiple times. Two scenarios: (1) Full restoration: if you sell your current VA-financed home and pay off the VA loan, your entitlement is fully restored and you can use your VA benefit again with no down payment; (2) One-time restoration: if you still own a VA-financed property but want to buy another primary residence, you can use remaining entitlement (bonus entitlement or "second-tier" entitlement) — the combined guarantee must still be at least 25% of the loan amount. Some Veterans own two VA-financed properties simultaneously this way. Common scenario: relocated Veterans can purchase a new home with VA benefit at the new duty station while renting out (with VA approval) the original VA-financed home. Apply for entitlement restoration via VA Form 26-1880 or online at VA.gov certificate of eligibility.

VA loans require that the property meet VA Minimum Property Requirements (MPRs) — basic safety, soundness, and sanitation standards assessed during the VA appraisal. Key MPRs: (1) safe and adequate heating system; (2) safe drinking water and sewage disposal; (3) roof with sufficient remaining life; (4) no evidence of termite activity (a termite inspection is required in some states); (5) adequate electrical system; (6) structural soundness — no significant foundation issues; (7) safe access to the property. MPRs are similar to FHA Minimum Property Standards but slightly more flexible in some areas. If the VA appraisal identifies required repairs, they must be completed before funding — this can complicate purchases of distressed or older properties. Compare with FHA loan property requirements. The full MPR list is in VA Lender Handbook Chapter 12 at VA Lender Handbook (VA Pamphlet 26-7).