VA Loan Guide 2026: Benefits, Requirements, and How to Apply

VA home loans are the best mortgage deal in America. Zero down payment, no [private mortgage insurance](/blog/mortgage-insurance-pmi-guide), competitive interest rates, and limited closing costs — backed by the U.S. Department of Veterans Affairs.

If you've served in the military, you've earned this benefit. Here's everything you need to know to use it.

What Is a VA Loan?

A VA loan is a mortgage guaranteed by the Department of Veterans Affairs. Like FHA loans, the VA doesn't lend money directly. Instead, it guarantees a portion of the loan, which reduces lender risk and enables better terms for borrowers.

The VA guarantees up to 25% of the loan amount. This guarantee replaces the need for a down payment or private mortgage insurance.

VA Loan Benefits

1. Zero Down Payment

This is the headline benefit. You can finance 100% of the home's value. On a $400,000 home, that saves you $14,000–$80,000 compared to conventional down payment requirements.

2. No Private Mortgage Insurance (PMI)

Conventional loans with less than 20% down require PMI, which costs $100–$300+/month. VA loans never require PMI, regardless of how much you put down.

Annual savings compared to a conventional loan with 5% down on a $350,000 home: Approximately $1,500–$2,400/year in PMI alone.

3. Lower Interest Rates

VA loans consistently carry lower interest rates than conventional and FHA loans. In 2026, VA rates typically run 0.25%–0.5% below conventional rates.

On a $350,000 loan, a 0.5% lower rate saves approximately:

• $100/month
• $1,200/year
• $36,000 over 30 years

4. Limited Closing Costs

The VA restricts what lenders can charge veterans:

VA borrowers cannot be charged for:

• Attorney fees (in most cases)
• Broker commissions
• Prepayment penalties
• HUD/VA inspection fees (unless required)

Sellers can pay up to 4% of the purchase price toward the veteran's closing costs and concessions.

5. No [Prepayment Penalty](/blog/dscr-loan-prepayment-penalty)

You can make extra payments or pay off the loan early at any time with no penalty.

6. Easier Qualification Standards

• No minimum credit score set by the VA (though most lenders require 620+)
• Higher DTI limits (up to 41% standard, often higher with compensating factors)
• More lenient standards for past credit issues

7. Foreclosure Avoidance Help

If you ever struggle to make payments, the VA offers assistance including:

• [Loan modification](/blog/what-happens-when-you-miss-mortgage-payment)
• Repayment plans
• VA-assigned counselors
• The VA can intervene with your lender on your behalf

8. Reusable Benefit

You can use your VA loan benefit multiple times throughout your life. After selling a home and paying off the loan, your full entitlement is restored.

Eligibility Requirements

Service Requirements

You need a Certificate of Eligibility (COE), which requires meeting one of these service minimums:

Active Duty:

• Currently serving, or
• 90 consecutive days during wartime, or
• 181 consecutive days during peacetime, or
• 24 months (or the full period ordered to active duty, with a minimum of 90 days)

Post-9/11 era (after September 10, 2001):

• 90 consecutive days of active service, or
• 24 months total active service

National Guard / Reserves:

• 90 days of active service (Title 10 orders), or
• 6 years of service in the Guard/Reserves with an honorable discharge, or
• 90 days under Title 32 orders (with at least 30 consecutive days)

Surviving Spouses:

• Spouse of a veteran who died in service or from a service-connected disability
• Spouse of a service member missing in action or a prisoner of war
• Must not have remarried (exceptions exist for remarriages after age 57 or after December 16, 2003)

Discharge Requirements

You must have been discharged under conditions other than dishonorable. Acceptable discharge types:

• Honorable
• General (under honorable conditions)
• Other than dishonorable (case-by-case review)

If you received a dishonorable or bad conduct discharge, you may still be eligible if the VA determines you have qualifying service periods with acceptable discharges.

Getting Your Certificate of Eligibility (COE)

Three ways to get it:

1. Through your lender: Most VA-approved lenders can pull your COE electronically in minutes through the VA's Web LGY system.
2. Online: Apply through eBenefits at eBenefits.va.gov.
3. By mail: Submit VA Form 26-1880 with supporting documents.

Documents you may need:

• DD Form 214 (for veterans)
• Statement of Service letter from your commanding officer (for active duty)
• NGB Form 22 (for National Guard)
• Discharge or separation papers

VA Loan Limits (2026)

For veterans with full entitlement (no existing VA loan or the previous one was fully repaid), there is no loan limit. You can borrow as much as a lender will approve with zero down payment.

For veterans with reduced entitlement (e.g., an existing VA loan), the 2026 conforming loan limit applies:

If you exceed the limit with reduced entitlement, you'll need a down payment of 25% of the amount over the limit.

VA Funding Fee

The VA funding fee is a one-time charge that helps fund the VA loan program. It replaces the ongoing mortgage insurance of other loan types.

2026 VA Funding Fee Rates

Purchase Loans:

On a $350,000 loan with 0% down (first use):

• Funding fee: $350,000 × 2.15% = $7,525
• Usually financed into the loan

Refinance Loans:

Who Is Exempt From the Funding Fee

You pay no funding fee if you:

• Receive VA disability compensation
• Are eligible for VA disability compensation but receive retirement pay instead
• Are a surviving spouse of a veteran who died in service or from a service-connected disability
• Are an active-duty Purple Heart recipient
• Are receiving Dependency and Indemnity Compensation (DIC)

The disability exemption alone saves thousands of dollars. If you have a pending VA disability claim, consider waiting for a decision before closing — the exemption can be applied retroactively in some cases.

VA Loan Property Requirements

Minimum Property Requirements (MPRs)

Like FHA, VA loans require the property to meet minimum standards:

• Safe: No health or safety hazards
• Structurally sound: Good foundation, roof, walls, floors
• Sanitary: Adequate sewage, clean water, functional plumbing
• Adequate space: Sufficient room for living (no specific square footage requirement)
• Accessible: Must have reasonable access from a public or private road

VA Appraisal

A VA-assigned appraiser evaluates the property. Common issues that flag problems:

• Wood-destroying insects (termite inspection required in many states)
• Insufficient crawl space ventilation
• Lead paint hazards (pre-1978 homes)
• Roof with inadequate remaining life
• Electrical or plumbing deficiencies
• Missing heating system (must have permanent heat source)

Eligible Property Types

• Single-family homes
• Condos (must be VA-approved or meet certain criteria)
• Townhouses
• Multi-unit properties (1–4 units, you must occupy one)
• Manufactured homes (on a permanent foundation)
• New construction

Not eligible: Vacant land (unless you're building immediately), co-ops (in most cases), properties in poor condition that don't meet MPRs.

Credit and Income Requirements

Credit Score

The VA sets no minimum credit score. However:

• Most lenders require 620+
• Some specialty VA lenders go as low as 580
• A few lenders will consider 500+ on a case-by-case basis

Higher credit scores get better rates, just like any other loan.

[Debt-to-Income Ratio](/blog/dti-ratio-explained)

• VA guideline: 41% back-end DTI
• With compensating factors: 50%+ is possible

Compensating factors include:

• Excellent credit history
• Low housing expense relative to income
• Significant cash reserves
• Tax-free income (VA disability, BAH — calculated at 125% of actual amount)
• Minimal consumer debt
• Long-term employment stability

Residual Income

This is unique to VA loans. Beyond DTI, the VA requires lenders to verify you have enough residual income — money left over after all major expenses — to cover basic family needs.

Residual income minimums vary by:

• Region (Northeast, Midwest, South, West)
• Family size
• Loan amount

Example: A family of 4 in the West with a loan over $80,000 needs at least $1,117/month in residual income after taxes, mortgage, debts, utilities, and maintenance estimates.

This protects veterans from overextending, even if their DTI technically qualifies.

VA Loan Types

VA Purchase Loan

The standard VA loan for buying a home. Zero down, no PMI, competitive rates.

VA Interest Rate Reduction Refinance Loan (IRRRL)

Also called the "VA Streamline Refinance":

• Must already have a VA loan
• No appraisal required
• Minimal [documentation](/blog/heloc-documentation-requirements)
• Reduced funding fee (0.50%)
• Must result in a lower rate or switch from ARM to fixed

VA Cash-Out Refinance

• Refinance up to 100% of your home's value
• Available to veterans with any existing loan type (not just VA)
• Can be used to switch from conventional/FHA to VA

VA Native American Direct Loan (NADL)

For eligible Native American veterans buying, building, or improving a home on Federal Trust Land.

VA Adapted Housing Grants

For veterans with service-connected disabilities:

• Specially Adapted Housing (SAH): Up to $117,014 (2026) for wheelchair-accessible modifications
• Special Housing Adaptation (SHA): Up to $46,808 (2026)
• Temporary Residence Adaptation (TRA): For veterans temporarily living in a family member's home

Using Your VA Benefit: Step by Step

Step 1: Confirm Eligibility and Get Your COE

Request your Certificate of Eligibility through your lender, eBenefits, or by mail. Most lenders can pull this instantly.

Step 2: Find a VA-Experienced Lender

Not all lenders are equally competent with VA loans. Look for lenders who:

• Process a high volume of VA loans
• Have VA-specific loan officers
• Can explain the VA funding fee, residual income, and entitlement clearly

Get quotes from at least 3 VA lenders. Compare rates, origination fees, and lender credits.

Step 3: Get Pre-Approved

Provide income documents, authorize a credit pull, and receive your pre-approval letter. This tells sellers you're a qualified buyer.

Step 4: Find a Home

Work with a real estate agent familiar with VA transactions. Some sellers have misconceptions about VA offers (that they're slower or more likely to fall through). A knowledgeable agent can address these concerns.

Step 5: Make an Offer

VA offers are competitive. The zero-down-payment aspect doesn't weaken your offer — it's not the seller's concern how you finance the purchase.

Step 6: VA Appraisal

Your lender requests the VA appraisal through the VA's portal. VA appraisals typically take 7–14 days, sometimes longer in busy markets.

If the appraisal comes in low:

• Negotiate a lower price
• The buyer can pay the difference in cash
• Challenge the appraisal with comparable sales (Reconsideration of Value)
• Walk away (VA loans include an automatic escape clause for low appraisals)

Step 7: Underwriting and Closing

Final loan approval, title work, and closing. VA loans typically close in 30–45 days.

VA Loan Myths — Debunked

"VA loans take forever to close"

False. Average VA loan closing times are comparable to conventional loans (30–45 days). The VA appraisal can add a few days in some markets, but experienced lenders manage the timeline efficiently.

"Sellers don't want VA offers"

Mostly false. Some uninformed sellers or agents avoid VA offers, but legally, sellers cannot discriminate based on financing type. A strong offer with a VA pre-approval letter is competitive.

"You can only use a VA loan once"

False. VA loan benefits are reusable. You can have one VA loan, sell the home, and use the benefit again. In some cases, you can even have two VA loans simultaneously.

"VA loans are only for houses"

False. VA loans cover single-family homes, condos, townhouses, multi-unit properties (up to 4 units), manufactured homes, and new construction.

"You need perfect credit for a VA loan"

False. VA loans are more flexible on credit than conventional loans. Many lenders approve VA loans with credit scores of 580–620.

VA Loan vs. Conventional vs. FHA

*Unless 10%+ down payment, in which case MIP drops after 11 years.

For eligible veterans, VA loans are almost always the best option — especially for first-time buyers with limited savings.

FAQs

Can I use a VA loan to buy a second home or investment property?

VA loans are for primary residences only. However, you can buy a multi-unit property (up to 4 units), live in one, and rent the others. You can also PCS to a new duty station, keep your current VA-financed home as a rental, and get a new VA loan for your next primary residence (using remaining entitlement).

What happens to my VA loan if I get deployed?

Your mortgage obligation continues, but the Servicemembers Civil Relief Act (SCRA) caps your interest rate at 6% during active duty. The VA also provides financial counseling and can intervene with lenders if you face hardship.

Can my spouse use my VA loan benefit?

A spouse can be a co-borrower on a VA loan, but only the veteran's service generates the entitlement. If two veterans are married, they can combine entitlements.

How much does a VA loan save compared to conventional?

On a $350,000 home with 0% down over 30 years: approximately $40,000–$70,000 in total savings from no PMI, lower rates, and no down payment opportunity cost.

Can I use a VA loan for a condo?

Yes, but the condo project must be VA-approved. Check the VA-approved condo list. If it's not approved, the HOA can apply — but it takes 6–12 weeks.

What if I have a VA disability rating?

You're exempt from the funding fee, which saves $5,000–$12,000+ depending on loan amount. Your disability income (tax-free) is counted at 125% for qualification purposes, increasing your buying power.

Can I build a house with a VA loan?

Yes. VA construction loans exist, though fewer lenders offer them. You'll typically need:

• Approved builder
• Complete construction plans and specifications
• Fixed-price contract
• The land must meet VA property requirements

How do I restore my VA entitlement?

When you sell a home and pay off the VA loan, your entitlement is automatically restored. You can also request a one-time entitlement restoration without selling if you've paid off the loan.

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Served your country? Let us help you use the benefits you've earned. HonestCasa's VA loan calculator shows your estimated payment, funding fee, and savings compared to conventional financing.

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