What Is a VA Loan?
A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs, available to eligible active-duty service members, veterans, National Guard, Reservists, and qualifying surviving spouses. VA loans offer 100% financing (no down payment), no private mortgage insurance, competitive interest rates, and flexible credit requirements. The program is funded by a one-time VA funding fee (typically 1.4-3.6% of the loan amount, financeable) — which is waived entirely for veterans with a service-connected disability rating.
Key Facts
Who Qualifies for a VA Loan?
VA loan eligibility is service-based, not income-based. Active-duty service members qualify after 90 continuous days of service. Veterans qualify with 90 days of wartime service or 181 days of peacetime service — though the specific threshold depends on the era and discharge type. National Guard and Reservists qualify after 6 years of service or 90 days of activated federal service. Surviving spouses of service members who died in the line of duty or from a service-connected disability also qualify. Eligibility is documented via a Certificate of Eligibility (COE) issued by the VA, which your lender can typically pull electronically in minutes.
How VA Entitlement Works
The VA doesn't make loans — it guarantees a portion of the loan to the lender, allowing the lender to offer 100% financing without the borrower paying mortgage insurance. The 'entitlement' is the dollar amount of guaranty available to the veteran. Most veterans have 'full entitlement' on their first use, which means there is effectively no loan limit and no down payment required. If you've used your VA loan benefit before and haven't restored your entitlement (typically by selling and paying off the prior VA loan), you may have 'partial entitlement' — which can still be used but introduces a county loan limit calculation.
Understanding the VA Funding Fee
Because VA loans don't require mortgage insurance, the program is funded by a one-time VA funding fee paid at closing. For first-time use with no down payment, the fee is 2.15% of the loan amount (active-duty/veterans) or 2.4% (National Guard/Reserve). Subsequent uses without a down payment increase to 3.3%. Putting 5% down reduces the fee to 1.5%; 10% down reduces it to 1.25%. The fee can be financed into the loan, so it doesn't have to come out of pocket. Veterans with a VA-rated service-connected disability of 10% or higher are exempt from the funding fee entirely — a significant benefit that many eligible veterans don't realize they qualify for.
VA Loan Property & Use Requirements
VA loans can only be used for primary residences — you must occupy the home within 60 days of closing and use it as your primary home. Investment properties and vacation homes are not eligible. The VA does, however, allow 1-4 unit properties as long as you occupy one of the units. The property must pass a VA appraisal, which includes both a value determination and a Minimum Property Requirements (MPR) check — looking for things like working heat, safe water, sound roof, no major structural issues, and (for older homes) lead paint hazards. VA appraisals are sometimes more conservative than conventional appraisals, which can affect deals on fixer-upper properties.
Specialized VA Programs: OTC Construction & IRRRL
Beyond standard purchase and refinance loans, the VA program supports specialized executions. The VA One-Time Close construction loan (VA OTC) allows veterans to build a custom home with 100% financing on land + construction in a single closing. The VA Interest Rate Reduction Refinance Loan (IRRRL) — sometimes called a 'VA streamline' — allows veterans with an existing VA loan to refinance into a lower rate with minimal documentation, no appraisal in many cases, and no income re-verification. Cash-out VA refinances are also available, allowing up to 90% LTV on owner-occupied properties.
Realtor Referral
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From the Blog
Further Reading
Loan TypesVA Loans: The Complete Guide for Military Borrowers
VA loans offer some of the best terms available to any borrower — no down payment, no PMI, competitive rates. Here's everything you need to know about eligibility, entitlement, and the process.
VA LoansVA One-Time Close New Construction Loan: 100% Financing on Land and Build, No Payments During Construction, and Rate Protection With a One-Time Float-Down
Eligible veterans and service members can finance both the land purchase and the cost of construction into a single VA mortgage — up to 100% LTV, up to $4 million, with no required payments during the build, an 11-month construction period, and a one-time float-down if rates improve before the home is complete. We walk through how the program works, who qualifies, what to expect at each phase, and how it compares to traditional two-close construction financing.