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What Is a VA Loan?
A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs. It is offered to eligible veterans, active-duty service members, and surviving spouses. VA loans have some of the best terms available anywhere in the mortgage market: no down payment, no private mortgage insurance, and competitive interest rates.
Private lenders like banks and mortgage companies make VA loans, but the VA guarantees a portion of each loan. This reduces risk for lenders and lets them offer better terms to borrowers.
VA Loan Eligibility Requirements
Service Requirements
You must have served in one of these categories to be eligible:
Active-duty service members: Currently serving and have been on active duty for at least 90 consecutive days.
Veterans: Served the required time and were discharged under conditions other than dishonorable.
| Wartime Service | Peacetime Service | National Guard / Reserve |
|---|---|---|
| 90 consecutive days active duty | 181 consecutive days active duty | 6 years of service OR 90 days active during wartime |
National Guard and Reserve members: 6 years of service, or 90 days of active duty during wartime, or 181 days in peacetime.
Surviving spouses: Unmarried spouses of veterans who died in service or from a service-connected disability. Spouses of POWs or MIAs may also qualify.
Certificate of Eligibility (COE)
To apply for a VA loan, you need a Certificate of Eligibility from the VA. This document proves to lenders that you meet service requirements. You can get your COE online through the VA’s eBenefits portal, through your lender, or by mail using VA Form 26-1880.
Credit Score Requirements
The VA does not set a minimum credit score. Individual lenders set their own minimums. Most require at least 580 to 620. Borrowers with scores above 680 will have the most lender options and the best rates.
Income and DTI Requirements
VA lenders look at your debt-to-income ratio. Most prefer DTI under 41%. But the VA also uses a residual income test, which checks how much money you have left over after paying all debts and living expenses. This is unique to the VA program and often helps borrowers who have higher DTIs.
VA Loan Benefits
Zero Down Payment
This is the biggest benefit. With a conventional loan, you typically need 3% to 20% down. On a $300,000 home, 20% down is $60,000. VA loans require $0 down for qualified borrowers with full entitlement.
No Private Mortgage Insurance (PMI)
Conventional loans require PMI when you put down less than 20%. PMI typically costs 0.5% to 1.5% of the loan per year. On a $300,000 loan, that is $1,500 to $4,500 per year. VA loans have no PMI at all.
Competitive Interest Rates
Because the VA backs a portion of the loan, lenders take on less risk. This lets them offer lower interest rates than many other loan types, often 0.25% to 0.50% lower than conventional loans.
Limits on Closing Costs
The VA limits the fees lenders can charge. Sellers are also allowed to pay all of your closing costs under VA rules, which can further reduce your out-of-pocket expenses at closing.
Foreclosure Avoidance Assistance
If you ever struggle to make payments, the VA has dedicated staff to help you work with your lender to avoid foreclosure.
The VA Funding Fee
The VA funding fee is a one-time charge that helps fund the VA loan program. It is not paid out of pocket by most borrowers; it is usually rolled into the loan amount.
| Down Payment | First VA Loan | Subsequent VA Loan |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5% to 9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Who is exempt from the funding fee:
- Veterans receiving VA disability compensation
- Surviving spouses of veterans who died in service or from a service-connected disability
- Service members who have received the Purple Heart
VA Loan Limits
As of 2020, there are no VA loan limits for borrowers with full entitlement. You can borrow as much as a lender is willing to lend you with no down payment.
If you have used your VA loan entitlement before and still have an active VA loan, limits still apply based on your remaining entitlement and your county’s conforming loan limit.
How to Apply for a VA Loan
Step 1: Get your Certificate of Eligibility from the VA.
Step 2: Find a VA-approved lender. Most banks and mortgage companies are approved. Compare at least 2 to 3 lenders for the best rate.
Step 3: Get preapproved. The lender will verify your COE, pull your credit, and review your income.
Step 4: Find a home. VA loans can only be used for primary residences, not investment properties or vacation homes.
Step 5: VA appraisal. The VA requires its own appraisal to confirm the home meets minimum property requirements. This protects you and the VA.
Step 6: Close the loan. Review all documents and sign.
For a full comparison of loan programs available to homebuyers, see our guide to the best first-time homebuyer loan programs of 2026. You may also want to read our guide to FHA loan requirements to compare your options.
VA Loan vs. FHA Loan vs. Conventional Loan
| Feature | VA Loan | FHA Loan | Conventional |
|---|---|---|---|
| Down payment | 0% | 3.5% | 3% to 20% |
| PMI required | No | Yes (MIP) | Yes if under 20% down |
| Min credit score | 580 (lender-set) | 580 | 620 |
| Funding/insurance fee | 1.25% to 3.3% | 1.75% upfront + annual | None |
| Who can use it | Veterans, military | Anyone who qualifies | Anyone who qualifies |
Frequently Asked Questions
Who qualifies for a VA loan?
Active-duty service members, veterans, National Guard members, reservists, and surviving spouses of veterans who died in service or from a service-connected disability may qualify for a VA loan.
What credit score do you need for a VA loan?
The VA does not set a minimum credit score. Most VA lenders require at least 580 to 620. Some lenders will go as low as 500 with strong compensating factors.
Do VA loans require a down payment?
No. VA loans allow 0% down payment for eligible borrowers. This is one of the biggest benefits of the VA loan program.
What is the VA funding fee?
The VA funding fee is a one-time charge that helps fund the VA loan program. It ranges from 1.25% to 3.3% of the loan amount depending on down payment size and whether it is your first VA loan. Some veterans are exempt.
Can I use a VA loan more than once?
Yes. VA loan eligibility can be restored after you sell your home and pay off the previous VA loan, or you can have two VA loans at once if your entitlement allows it.
Rates as of May 2026.