VA Loans

Home Purchase

Purchasing your home with a loan designed for veterans, active duty military, and eligible surviving spouses

How it works

VA Loans are a mortgage benefit offered to veterans, active duty military, and eligible surviving spouses by the U.S. Department of Veterans Affairs (VA). These loans are designed to help you purchase a home with favorable terms, including no down payment and competitive interest rates.

Benefits of the VA Loan

One of the most appealing aspects of VA loans is the ability to secure 100 percent financing, meaning no down payment is required. Furthermore, VA loan borrowers are exempt from monthly insurance premiums like private mortgage insurance (PMI) or mortgage insurance premium (MIP). Additionally, veterans may qualify for more competitive interest rates compared to conventional loans.

0% Down Payment

No Private Mortgage Insurance

Competitive Interest Rates

Streamlined Refinance

Eligibility

To qualify for a VA loan, you have to meet one or more of the following:

• You served 90 consecutive days of active service during wartime
• You served 180 days of active service during peacetime
• You have 6 years of service in the National Guard or Reserve, or served 90 days under Title 10 or Title 32 orders
• You are a spouse of a service member who died while serving or due to a service-related disability

What is the VA Funding Fee?

The VA imposes a funding fee on every VA loan, with rates determined by your Certificate of Eligibility (COE). This fee can be paid in different ways: by the buyer at closing, by the seller at closing, or by rolling it into the loan. Notably, the funding fee is waived for veterans with a service-connected disability of 10 percent or greater.

For first-time users without a disability, the fee is 2.15%, while subsequent use loans carry a 3.3% fee. A 5% down payment reduces the fee to 1.5%, and a 10% down payment further reduces it to 1.25%. Active-duty military can apply to have the funding fee waived before separation or retirement.

VA Purchase or Construction Loans
	Down Payment	Funding Fee
First Use	Less than 5%	2.15%
	5% or more	1.5%
	10% or more	1.25%
Subsequent Use	Less than 5%	3.3%
	5% or more	1.5%
	10% or more	1.25%
VA Cash-Out Refinance
First Use	-	2.15%
Subsequent Use	-	3.3%
VA Interest Rate Reduction Refinance Loan (IRRRL)
First Use	-	0.5%
Subsequent Use	-	0.5%
VA Loan Assumption
First Use	-	0.5%
Subsequent Use	-	0.5%

VA Home Inspection

While the VA loan appraisal process includes a habitability check, it doesn’t replace a comprehensive home inspection. VA loans require an inspection for wood-destroying organisms (termite inspections). If your home is going to have a well as the primary source of water, that will also need to be inspected.

The good news is that these inspections can now be paid for by either the buyer or seller, eliminating the previous requirement for sellers to cover the cost.

VA Mandatory Occupancy

VA loans are exclusively for primary residence purchases. The veteran or spouse must move into the home within 60 days of closing and reside there for at least one year before considering renting or selling it.

However, valid changes in circumstances, such as deployments or job changes, can provide flexibility in meeting the one-year occupancy requirement.

VA Eligible Property Types

VA loans can be used for various property types, including single-family homes, condos, townhomes, duplexes, triplexes, quads, mobile/manufactured homes (when owned with the land), and new construction.

However, VA loans cannot be used for commercial property, raw land, undeveloped lots, or investment homes.

VA Eligible Properties

• Single Family Home
• Condominium
• Townhouse
• Multi-Unit (2-4 units)
• Mobile/Manufactured Home
• New Construction

NOT VA Eligible

• Commercial Property
• Raw Land
• Undeveloped Lots
• Investment Homes

What is the VA Interest Rate Reduction Refinance Loan (VA IRRRL)?

The VA IRRRL (pronounced like your favorite Uncle Earl), also known as a VA Streamlined Refinance, offers veterans a streamlined way to reduce their VA loan interest rate by at least half a percent or more without the need for an appraisal, income verification, equity requirements, or a specific credit score.

This streamlined refinance option is a valuable tool for veterans to lower their monthly mortgage payments, especially during periods of declining interest rates.

The VA IRRRL serves as a powerful financial tool for veterans to save money on their mortgage payments without the typical requirements associated with traditional refinancing.

Instantly check your VA IRRRL eligibility >

Loan Comparisons

The two most commonly compared loans for military is the VA loan and the conventional loan. Both loan products can be the right choice based on the specific circumstances, however, the VA loan often has clear advantages when compared side by side in a standard home purchase.

VA Loan vs Conventional Loan

	VA	Conventional
Credit Score	As low as 500	Typically 620+
Down Payment	0%	3% or more
Eligibility	Veteran, active-duty military, surviving spouses	No restrictions
Interest Rates	VA guarantees part of the loan, rates are usually lower than conventional	Can be fixed or adjustable; rates usually higher than VA
Funding Fee	Fee can be reduced with a down payment or, in some cases, waived	N/A
Private Mortgage Insurance	N/A	Required if down payment is less than 20%
Property Requirements	Must be a primary residence and pass VA appraisal standards	Residential dwelling with no more than 4-units
Assumability	If buyer meets VA eligibility requirements, loan can be assumed	Most are not assumable

Loan Comparison Example

EXAMPLE
	VA	Conventional
Purchase Price	$500,000	$500,000
Term	30 Years	30 Years
Rate	5.63%	6.50%
Down Payment	$0 or 0%	$25,000 or 5%
Loan Amount	$500,000	$475,000
Principal & Interest	$2,878	$3,117
Mortgage Insurance	$0	$114
COSTS over 10 Years
Mortgage Insurance		$16,644
Additional Interest		$44,640
Down Payment		$25,000
TOTAL Additional COST		$86,284

How do I Qualify for a VA Loan?

Qualification for a VA loan can vary among lenders and may be influenced by factors such as credit score requirements, the ability to use gift funds, and how different types of military income are treated. It’s essential to work with a lender who understands these nuances.

Getting Started on Your VA Loan

The first step in obtaining a VA loan is to speak with a military specialized lender to get pre-qualified. From there, you will submit specific documents to verify your income, debt-to-income ratio, prove eligibility and other requirements. Once you have a pre-qualification letter, then you can start house shopping!

Home Purchase

Related Topics

We offer a variety of resources so you can clearly understand the process

Go to Blog

Helpful Resources