What Is a VA Loan?
A VA home loan is a mortgage backed by the U.S. Department of Veterans Affairs. The VA guarantees a portion of each loan, which lets approved private lenders offer terms unavailable on conventional or FHA financing: no down payment, no monthly mortgage insurance, and competitive rates even for borrowers with imperfect credit histories.
Congress created the program in 1944 under the GI Bill. Since then it has helped more than 28 million veterans and service members buy homes. In fiscal year 2024, the VA guaranteed roughly 400,000 purchase loans. The program is self-funded through the VA funding fee — covered in detail below — so it costs taxpayers nothing in normal market conditions.
VA loans are for primary residences only. You cannot use one to finance a vacation home or investment property. The borrower must intend to occupy the home within a reasonable time after closing, generally 60 days.
VA Loan Eligibility 2026
Eligibility turns on service history. Meeting the minimum service requirement doesn't automatically approve a loan — lenders still evaluate credit and income — but it qualifies you to apply for a Certificate of Eligibility (COE) from the VA. Most lenders pull the COE electronically in minutes; you can also request one at va.gov or by mailing VA Form 26-1880.
| Borrower Category | Minimum Active-Duty Service | Notes |
|---|---|---|
| Active-duty service member | 90 continuous days | Applies during wartime or peacetime |
| Wartime veteran | 90 days active duty | WWII, Korea, Vietnam, Gulf War |
| Peacetime veteran | 181 continuous days | Must have been released under conditions other than dishonorable |
| National Guard / Reserves | 6 years of service, OR 90 days of non-training active duty | Blue Water Navy Act expanded Reserves access as of Jan. 1, 2020 |
| Surviving spouse | N/A | Spouse of veteran who died in service or from a service-connected disability; not remarried |
Early discharges for hardship, government convenience, reduction in force, or a service-connected medical condition can still qualify — the VA reviews character of discharge on a case-by-case basis. A dishonorable discharge generally disqualifies a veteran, but other-than-honorable or general discharges may still be eligible depending on circumstances.
The VA Funding Fee
Because VA loans carry no down payment requirement and no monthly mortgage insurance, the VA collects a one-time upfront fee to keep the guaranty fund solvent. The fee is a percentage of the loan amount — not the purchase price — and can be financed into the loan or paid in cash at closing.
The rates below are the current figures effective April 7, 2023, confirmed by the VA's official funding fee page at va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs (last updated January 15, 2026). These rates are locked by statute through November 14, 2031 under 38 U.S.C. § 3729.
Purchase & Construction Loans (Veterans, Active Duty, Guard/Reserve)
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
The funding fee for a $400,000 purchase with no down payment on a first-time use comes to $8,600 (2.15% × $400,000). Rolled into the loan over 30 years at an assumed 6.75% rate, that adds roughly $56 to the monthly payment — still far less than the $150–$300/month PMI a conventional borrower would pay on the same price point without 20% down.
Who Pays No Funding Fee
The following borrowers are fully exempt from the VA funding fee, per official VA guidance:
- Veterans receiving VA compensation for a service-connected disability
- Veterans entitled to receive such compensation but receiving military retirement or active-duty pay instead
- Surviving spouses receiving Dependency and Indemnity Compensation (DIC)
- Active-duty service members who received a Purple Heart on or before loan closing
- Service members with a proposed or memorandum disability rating before closing (based on a pre-discharge claim)
Important: If your disability claim was pending at closing and you were later awarded service-connected compensation retroactive to before your closing date, you may be entitled to a full refund of the funding fee. Contact your VA Regional Loan Center at 877-827-3702.
VA Loan Limits & Entitlement
Since January 1, 2020 — when the Blue Water Navy Veterans Act took full effect — there are no county loan limits for veterans with full VA entitlement. A veteran with full entitlement can borrow whatever amount a lender will approve, on any home in the country, with zero down payment required.
Full entitlement exists when you have never used a VA loan, or you have used one and paid it off and had the entitlement restored, or a previous VA loan was paid in full and the property sold. Your COE will show basic entitlement of $36,000, which actually means your guaranty for loans above $144,000 is 25% of any loan amount — uncapped.
Veterans with remaining partial entitlement — meaning they have an active VA loan that hasn't been fully repaid or restored — are still subject to county conforming loan limits set by the Federal Housing Finance Agency. In 2026, the standard FHFA conforming limit is $806,500 in most counties, with higher limits in designated high-cost areas. Check current county limits at fhfa.gov.
Credit, DTI & Residual Income
The VA does not set a minimum credit score. Lenders do. Most VA-approved lenders apply overlays requiring a 580–620 FICO, though some will go lower for well-qualified borrowers with strong residual income.
Debt-to-income (DTI) ratio guidelines run up to 41% for most lenders, but the VA allows DTI above 41% if the borrower meets residual income requirements — a feature unique to VA underwriting. Residual income is the money left each month after all debts, housing costs, and taxes are paid. The required amount varies by family size and region: a family of four in the South needs at least $1,003/month in residual income; the same family in the Northeast needs $1,025/month. Lenders verify these figures against VA tables. A borrower with 55% DTI but $1,800/month in residual income can still close a VA loan that a conventional lender would decline.
Pros and Cons of VA Loans
Advantages
- Zero down payment required with full entitlement
- No monthly private mortgage insurance
- No county loan limit for full-entitlement borrowers
- Competitive interest rates (typically 0.25–0.5% below conventional)
- Residual income test catches borrowers who can actually afford the loan
- Funding fee can be financed into the loan
- Streamlined refinance (IRRRL) with minimal paperwork
- VA limits certain closing costs lenders can charge
Drawbacks
- Upfront funding fee of 2.15%–3.3% (waived for disabled veterans)
- Primary residence only — no investment or vacation properties
- Property must meet VA Minimum Property Requirements (MPRs)
- VA appraisal required; can complicate fixer-upper purchases
- Not all sellers understand or accept VA offers — perception issue
- Subsequent-use fee of 3.3% can erode savings vs. conventional
Sample VA Monthly Payment
The numbers below are estimates only, based on illustrative assumptions. Your actual rate, taxes, and insurance will differ. Use the calculator on this site for a personalized figure.
| Component | Assumption | Monthly Amount |
|---|---|---|
| Purchase price | $400,000 | — |
| Down payment | $0 (0%) | — |
| VA funding fee (2.15%, financed) | $8,600 rolled in | — |
| Loan amount after fee | $408,600 | — |
| Interest rate (estimated, June 2026) | ~6.75% / 30-year fixed | — |
| Principal & Interest | — | $2,651 |
| Property taxes (est. 1.1% annually) | $400,000 × 1.1% ÷ 12 | $367 |
| Homeowners insurance (est.) | $1,800/yr ÷ 12 | $150 |
| Monthly mortgage insurance (PMI) | None — VA loans have no monthly MI | $0 |
| Total estimated monthly payment | — | $3,168 |
A comparable conventional loan at the same purchase price with 5% down ($20,000) would carry roughly $180–$220/month in PMI on top of a slightly higher principal balance — adding $2,160–$2,640 per year until the borrower reaches 20% equity. The VA's no-PMI structure is its biggest financial advantage for buyers who lack a large down payment.
See Your VA Monthly Payment
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Use the Full Mortgage Calculator →Frequently Asked Questions
Do VA loans really require no down payment?
Yes. Veterans and service members with full VA entitlement can borrow the entire purchase price with no down payment required — no dollar cap, regardless of home price. Lenders still approve you based on credit, income, and residual income, but the VA itself does not mandate any down payment.
Who is exempt from the VA funding fee?
Veterans receiving VA compensation for a service-connected disability pay no funding fee. The exemption also applies to surviving spouses receiving Dependency and Indemnity Compensation (DIC), and to active-duty members who have received a Purple Heart on or before closing. Confirm your exemption status with the VA at benefits.va.gov/homeloans.
Is there a VA loan limit in 2026?
Veterans with full VA entitlement face no county loan limit. They can borrow any amount their lender will approve, with no down payment required. The Blue Water Navy Veterans Act eliminated county limits for full-entitlement borrowers effective January 1, 2020. Veterans with remaining partial entitlement are still subject to county conforming loan limits set annually by the FHFA.
What credit score do I need for a VA loan?
The VA sets no minimum credit score. However, most VA-approved lenders impose their own overlays, commonly requiring a 580–620 FICO score. Lenders also evaluate residual income — money left over each month after all debts and living expenses — which is a VA-specific underwriting requirement that conventional loans do not use.