VA Loans

A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs, available to veterans, active-duty service members, and certain surviving spouses. It is, plainly, the strongest mainstream mortgage benefit in America: zero down payment, no monthly mortgage insurance, competitive rates, and no loan limit for borrowers with full entitlement. If you’ve earned VA eligibility, this is almost always the first program to price.

How a VA loan works

The VA doesn’t lend the money; private lenders do. The VA guarantees a portion of each loan, which protects the lender against loss and lets them offer terms no conventional product matches: nothing down, and no monthly mortgage insurance at any down payment level. Compare that with a conventional loan, where less than 20% down means PMI, or an FHA loan, where mortgage insurance typically runs for the life of the loan.

Your eligibility is documented by a Certificate of Eligibility (COE), which your lender can usually pull electronically. The amount of guarantee you have available is called entitlement; with full entitlement, there is no VA loan limit, so you can borrow whatever your income and credit qualify you for, even into jumbo territory, still with nothing down.

VA loans are for primary residences (no second homes or pure investment properties), though like FHA, you can buy a 2-4 unit property and live in one unit. Most VA loans are 30-year fixed-rate loans; 15-year terms and ARMs exist.

Who qualifies

Two layers: VA eligibility (service-based) and lender underwriting (financial).

Service eligibility, generally:

Veterans meeting minimum active-duty service requirements (which vary by service era)
Active-duty service members (typically after 90 continuous days)
Many National Guard and Reserve members (typically six years of service, or shorter periods with qualifying active-duty activation)
Surviving spouses of service members who died in service or from a service-connected disability, in most cases

Financial underwriting, typical lender expectations:

Credit score around 580–620+. The VA itself sets no minimum score; individual lenders do, and they vary, so a decline elsewhere doesn’t mean the answer is no everywhere.
Stable, documented income with roughly two years of history
Residual income, a VA-specific test that checks how much money is left over each month after major expenses, scaled to family size and region. It’s one reason VA loans perform so well despite zero down.
Debt-to-income ratio commonly up to around 41% by guideline, with substantial flexibility when residual income is strong.

What it costs

Interest rate. VA rates are consistently among the lowest of any program, because the guarantee is strong and default rates are low.
No monthly mortgage insurance. This is the big one. On a modest loan, no PMI/MIP can mean well over a hundred dollars a month versus FHA or low-down conventional.
The VA funding fee. A one-time fee, almost always financed into the loan (2026 figures, purchase loans):
- First use: 2.15% with less than 5% down, 1.50% with 5–9.99% down, 1.25% with 10%+ down
- Subsequent use: 3.30% with less than 5% down (same reduced tiers with a down payment)
- Exempt entirely: veterans receiving VA disability compensation, eligible surviving spouses, and Purple Heart recipients on active duty. A large share of VA borrowers pay no fee at all
Closing costs. Normal range (2–5%), with a VA quirk in your favor: the VA limits certain fees lenders can charge, and sellers may pay all of a buyer’s closing costs plus concessions.

Run zero-down scenarios against 5%- and 10%-down versions in our calculator suite; the funding-fee tiers make a modest down payment worth checking.

Pros and cons

Pros:

$0 down payment, with no loan limit for full-entitlement borrowers
No monthly mortgage insurance, ever, at any down payment
Rates that are typically the most competitive in the market
Flexible credit standards and the residual-income test’s common-sense underwriting
Funding fee waived for disability-rated veterans and other exempt groups
Reusable benefit: entitlement restores when the loan is paid off
No prepayment penalty; streamlined refinancing later via the VA IRRRL (funding fee just 0.5%)

Cons:

The funding fee (when not exempt) adds 1.25–3.30% to the loan balance
Primary residences only
Zero down means little starting equity, so a market dip early on can leave you temporarily underwater
The VA appraisal includes Minimum Property Requirements, so homes in poor condition can hit snags
Lender credit overlays vary widely, so a decline at one lender doesn’t mean the answer is no

VA vs. FHA and conventional

If you’re VA-eligible, the comparison is usually short. Against FHA: VA wins on down payment (0% vs. 3.5%), monthly cost (no MIP vs. life-of-loan MIP), and usually rate. Against conventional: VA wins on down payment and mortgage insurance; conventional’s main edge is for second homes and investment properties, which VA doesn’t cover, and for funding-fee-payers making large down payments, where the math occasionally tightens. A funding-fee-exempt veteran essentially never beats the VA loan elsewhere for a primary residence, but we’ll run the numbers rather than assume.

Getting started with Priority Home Mortgage

Priority Home Mortgage is a direct lender headquartered in Grand Rapids, Michigan, with branch teams in Michigan, Florida, Colorado, Tennessee, and North Carolina. We underwrite VA loans in-house, so your file gets judged on its actual profile by people you can talk to, not filtered through a third party’s overlay. Talk with a local loan officer about your COE and entitlement, or start with our quick quote form and we’ll price your VA scenario and show you exactly where the funding fee and monthly payment land.

VA Loans: your questions, answered

Who is eligible for a VA loan?

Veterans, active-duty service members, many National Guard and Reserve members, and certain surviving spouses. Minimum service requirements vary by era and duty type. The VA issues a Certificate of Eligibility (COE) that settles the question, and your lender can usually pull it electronically in minutes.

Can I use a VA loan more than once?

Yes, VA entitlement is reusable. When you sell a home and pay off the VA loan, your entitlement restores. You can even hold two VA loans at once in some situations, such as a PCS move, though second use raises the funding fee to 3.30% with nothing down.

What is the VA funding fee and does everyone pay it?

It's a one-time fee that funds the VA guarantee program, typically financed into the loan. For 2026 purchases it's 2.15% with less than 5% down on first use (3.30% on subsequent use), dropping to 1.50% with 5% down and 1.25% with 10% down. Veterans receiving VA disability compensation, eligible surviving spouses, and Purple Heart recipients on active duty are exempt entirely.

Is zero down actually a good idea?

It depends on your situation, but the option's value is real: it lets you buy years sooner than saving 5-20% would allow, and keeps cash in reserve for moving, repairs, and emergencies. The trade-off is starting with little equity, so if the market dips early you could owe more than the home's value for a time. Putting something down also lowers the funding fee.

Do sellers really avoid VA offers?

The reputation is outdated. VA appraisals have modernized, closing timelines are comparable to conventional, and VA loans consistently post among the lowest default rates of any program. A well-prepared VA offer with a solid pre-approval competes fine; the loan officer writing the pre-approval matters more than the loan type.

Is there a VA loan limit in 2026?

Not for borrowers with full entitlement. The VA removed loan limits for them in 2020, so the ceiling is what you qualify for. If you have reduced entitlement (say, an existing VA loan you kept), county conforming limits come into play for the guaranty calculation. Lenders still underwrite your income and credit normally either way.