Requirements, Costs, and How They Work
VA Home Loans in 2026: Requirements, Costs, and How They Work
VA Eligibility Requirements
VA Funding Fee & Closing Costs
VA Annual Benefits Report FY2025
The VA home loan is a mortgage issued by a private lender and partially guaranteed by the Department of Veterans Affairs. Eligible Veterans, active-duty service members, and certain surviving spouses can purchase with no down payment, pay no monthly mortgage insurance, and access the VA's fee protections. Qualification depends on Military service, income, credit, and the property.
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Who Is Eligible
- Active duty. Currently serving with at least 90 continuous days of service. [VA.gov]
- Gulf War era Veterans. 24 continuous months or the full period called to active duty, not less than 90 days. [VA.gov]
- Guard and Reserve. Six creditable years, or 90 days of active duty including 30 consecutive days on qualifying Title 32 orders. [VA.gov]
- Surviving spouses. Receiving VA Dependency and Indemnity Compensation, or spouse of a service member who is MIA or POW. [VA.gov]
What It Costs
- VA funding fee. 2.15% on a first-use purchase with no down payment; can be financed into the loan. [VA.gov]
- Exemptions. The VA lists five exemption categories, including Veterans receiving disability compensation, active-duty Purple Heart recipients, and surviving spouses receiving DIC. [VA.gov]
- Origination cap. Lenders may charge a flat fee not to exceed one percent of the loan amount. [VA rule] · Ch. 8
- No monthly mortgage insurance. The VA guarantee replaces PMI entirely. [VA.gov]
Getting Approved
- No VA minimum credit score. The VA does not set one; lenders apply their own overlays. [VA rule] · Ch. 4
- DTI guideline: 41%. A guide, secondary to residual income; exceeding 41% does not automatically disqualify. [VA rule] · 38 CFR 36.4340
- Residual income. The VA's primary affordability test, measuring cash remaining after all obligations. [VA rule] · 38 CFR 36.4340
- Automated underwriting. Determines a risk classification; the lender's underwriter makes the final approval decision. [VA rule] · Ch. 4
Benefits and Limits
- No down payment. With full entitlement, borrowers can finance the full appraised value. [VA.gov]
- No loan limit (full entitlement). The VA guarantees 25% of the loan amount with no cap. [VA rule] · Ch. 3
- Assumable. A qualified buyer can take over the loan at its original rate and terms. [VA rule] · Ch. 3
- Primary residence only. Occupancy within 60 days of closing; investment properties are not eligible. [VA rule] · Ch. 3
Top questions before you dig in
What is a VA loan and who guarantees it?
A VA loan is a mortgage issued by a private lender and partially guaranteed by the U.S. Department of Veterans Affairs. The VA does not lend money directly in most cases. Instead, the VA guarantees a portion of the loan, which allows lenders to offer no down payment and no monthly mortgage insurance to eligible borrowers.
How much does a VA loan cost upfront?
Most VA purchase loans carry a one-time funding fee. For first use with no down payment the fee is 2.15% of the loan amount, and most borrowers finance it into the loan rather than paying in cash. Veterans receiving VA disability compensation, Purple Heart recipients on active duty, and surviving spouses receiving DIC are exempt. Standard third-party closing costs still apply, and the VA caps the lender's origination charge at one percent of the loan amount.
Is there a VA loan limit in 2026?
For borrowers with full entitlement, there is no VA-imposed loan limit. The VA will guarantee 25% of whatever the lender approves, with no cap, as long as the borrower qualifies and the appraisal supports the value. For borrowers with partial entitlement, county-based limits tied to the conforming loan limit ($832,750 baseline in 2026) determine how much can be borrowed at zero down. Above that amount, the lender may require a down payment on the uncovered portion.
The Bottom Line Up Front
A VA loan is a mortgage backed by a guaranty from the Department of Veterans Affairs that lets eligible Veterans, active-duty service members, and surviving spouses buy a home with no down payment and no monthly mortgage insurance.
The VA does not lend the money; private lenders fund the loan, and the VA guarantees 25% of the loan amount for borrowers with full entitlement. The one-time VA funding fee on a first-use purchase with no down payment is 2.15%, and the VA’s five exemption categories cover Veterans receiving disability compensation, active-duty Purple Heart recipients, and others. In FY2025 the VA guaranteed 323,832 purchase loans, and 240,749 of those required no down payment.
VA Loan Requirements at a Glance
| Requirement | What the VA requires | What lenders may add |
|---|---|---|
| Military service | Qualifying active duty, Guard/Reserve, or surviving spouse status | None; eligibility is VA-determined |
| Certificate of Eligibility | Required on every VA purchase loan | Lender can pull electronically via WebLGY |
| Credit score | No VA minimum | Varies by lender |
| Debt-to-income ratio | 41% is a guide, secondary to residual income | Varies by lender |
| Residual income | Must meet VA guidelines by region and family size | Exceeding the guideline by 20% eliminates the need for supervisor justification on higher-DTI files |
| Down payment | $0 with full entitlement | Down payment may be needed with partial entitlement above county limit |
| Occupancy | Primary residence; occupy within 60 days of closing | None beyond VA rule |
| Property condition | Must meet VA Minimum Property Requirements | Some lenders add stricter property overlays |
| Funding fee | 2.15% first use, 0% down; exempt categories pay nothing | Can be financed into loan amount |
How VA Loans Work
The VA does not write your mortgage. A private lender funds the loan. The VA provides a guaranty to the lender: if the borrower defaults, the VA covers a portion of the loss. For loans above $144,000 with full entitlement, that guaranty equals 25% of the loan amount.
- The guaranty replaces the down payment. Because the VA covers 25%, lenders treat the loan as if the borrower made a substantial down payment, which is why no PMI is needed.
- Entitlement is what the VA guarantees. Your VA entitlement represents the VA’s maximum liability on your loan. With full entitlement, there is no cap on the loan amount.
- The COE proves your eligibility. A Certificate of Eligibility confirms your Military service and shows your entitlement status, prior VA loan usage, and any funding fee exemptions.
- Entitlement is reusable. Entitlement previously used may be restored once the loan is paid in full and the property is sold, or through a one-time restoration when the loan is paid off but the property is retained. Veterans can hold two VA loans simultaneously using remaining entitlement for the second purchase.
- The benefit has existed since 1944. The Servicemen’s Readjustment Act of 1944 created the program. The Blue Water Navy Vietnam Veterans Act of 2019 removed the loan limit for full-entitlement borrowers effective January 1, 2020.
Who Is Eligible for a VA Loan
Eligibility comes from Military service. The VA does not evaluate credit, income, or property for eligibility; those factors determine loan approval, not eligibility. The service requirement depends on when and how you served.
| Service category | Minimum service requirement | Notes |
|---|---|---|
| Current active duty | 90 continuous days | Currently serving; no discharge requirement |
| Gulf War era Veterans (Aug 2, 1990 to present) | 24 continuous months, or the full period called to active duty (not less than 90 days) | Less than 90 days if discharged for a service-connected disability |
| National Guard | 90 days of active duty including 30 consecutive days on qualifying Title 32 orders, or six creditable years | DD214 must show 32 USC sections 316, 502, 503, 504, or 505 activation |
| Reserves | 90 days of non-training active duty on Title 10 orders, or six creditable years in the Selected Reserve | Weekend drills alone do not count toward the 90-day active requirement |
| Surviving spouse | Spouse of a Veteran who died in service or from a service-connected disability and did not remarry, or remarried on or after age 57 and on or after December 16, 2003; or spouse of a service member who is MIA or POW |
Discharge matters. The VA states: “If you’ve received an other than honorable, bad conduct, or dishonorable discharge, you may not be eligible for VA benefits.” This is not a categorical bar: the VA conducts a character-of-service determination on discharges that are not clearly honorable, and some Veterans with other-than-honorable discharges have been found eligible. Apply and let the VA decide.
Getting Your Certificate of Eligibility
Three methods, in order of speed:
- Through your lender. Your lender may be able to use an online system called WebLGY to get your COE, often within minutes.
- VA.gov online. Log in to VA.gov with your ID.me or Login.gov account and request the COE digitally.
- VA Form 26-1880 by mail. Paper application mailed to the VA. Mail requests may take longer than requesting a COE online or through your lender.
For a detailed walkthrough, see the full COE guide.
Eligibility vs. Loan Qualification
Meeting the service requirement makes you eligible. Getting approved for a loan requires passing the lender’s and the VA’s financial standards.
- No VA minimum credit score. The VA does not have a minimum credit score requirement. Lenders set their own minimums as overlays, and those minimums vary from lender to lender.
- DTI at 41% is a guide. The VA’s debt-to-income ratio is “a guide and, as an underwriting factor, it is secondary to the residual income.” A ratio greater than 41% requires close scrutiny but does not automatically disqualify.
- Residual income is the primary test. Residual income measures how much cash remains each month after paying all debts, taxes, and a maintenance allowance. When residual income exceeds the VA guideline by at least 20%, loans with DTI above 41% do not require supervisor justification. See the residual income chart for thresholds by region and family size.
- Automated underwriting determines a risk classification. The Handbook states: “The automated systems do not approve or disapprove loans. They merely determine a risk classification.” Accept or Approve findings mean the file meets VA credit standards subject to documentation. Refer findings require manual underwriting, which is a more detailed human review, not a denial.
- Lenders may apply overlays. Each lender adds its own requirements on top of the VA’s rules. Overlays vary; if one lender declines a file, another may approve the same borrower on the same data.
For a deep dive into credit and lender selection, see the full credit score guide. For pre-approval strategy, see VA loan pre-approval. For how late payments affect your file, see VA loan late payments.
What a VA Loan Costs
The VA funding fee is a one-time charge that supports the VA guaranty program. Most borrowers finance it into the loan amount rather than paying it in cash at closing.
| Loan type / scenario | Funding fee rate |
|---|---|
| Purchase, first use, less than 5% down | 2.15% |
| Purchase, first use, 5% or more down | 1.50% |
| Purchase, first use, 10% or more down | 1.25% |
| Purchase, subsequent use, less than 5% down | 3.30% |
| Purchase, subsequent use, 5% or more down | 1.50% |
| Purchase, subsequent use, 10% or more down | 1.25% |
| Cash-out refinance, first use | 2.15% |
| Cash-out refinance, subsequent use | 3.30% |
| IRRRL (Interest Rate Reduction Refinancing Loan) | 0.50% |
| Manufactured home (not permanently affixed) | 1.00% |
| NADL (Native American Direct Loan) | 1.25% |
| Loan assumption | 0.50% |
Who Is Exempt from the Funding Fee
- Receiving VA compensation for a service-connected disability.
- Eligible to receive VA compensation for a service-connected disability, but receiving retirement or active-duty pay instead.
- Receiving Dependency and Indemnity Compensation (DIC) as the surviving spouse of a Veteran.
- Service member with a proposed or memorandum rating before the loan closing date that says they are eligible to get compensation because of a pre-discharge claim.
- Active-duty Purple Heart recipient who provides evidence on or before the loan closing date.
If you paid the funding fee and are later awarded VA compensation with an effective date before your loan closing, you may be eligible for a refund.
Closing Costs and Seller Concessions
- Origination fee capped at 1%. The lender may charge a flat fee not to exceed one percent of the loan amount, intended to cover all lender costs not separately itemized.
- Non-allowable fees. Veterans cannot be charged for the lender’s appraisals, inspections, loan closing or settlement fees, document preparation fees, or attorney’s services other than title work. These must come from the lender’s flat fee.
- Seller concessions vs. closing cost credits. The VA does not limit credits for a loan’s closing costs. However, seller concessions (anything of value added to the transaction that the seller is not customarily expected to pay) are capped at four percent of the property’s reasonable value. Normal discount points and payment of the buyer’s closing costs are not counted as concessions.
For the full breakdown, see VA loan closing costs and the funding fee guide.
Benefits and Limitations
| Benefits | Limitations |
|---|---|
| No down payment with full entitlement | Primary residence only; occupy within 60 days |
| No monthly mortgage insurance | One-time funding fee unless exempt |
| No VA-imposed loan limit with full entitlement | County limits apply with partial entitlement |
| No prepayment penalty | Property must meet VA Minimum Property Requirements |
| Assumable by a qualified buyer | Condos must be in a VA-accepted project; no individual unit approvals |
| Lender origination fee capped at 1% | Funding fee increases on subsequent use (3.30% at 0% down) |
| Non-allowable fee protections | Occupancy beyond 12 months after closing generally not reasonable |
VA vs. FHA vs. Conventional
The table below compares features where a primary source was fetched and verified for this page. Cells without a sourced value are left blank.
| Feature | VA loan | FHA loan | Conventional loan |
|---|---|---|---|
| Down payment | $0 with full entitlement | 3.5% minimum | Less than 20% requires PMI |
| Monthly mortgage insurance | None | Required for all FHA loans | Required below 20% down; removable at 80% LTV by request, automatic at 78% |
| Upfront fee | Funding fee: 2.15% first use, 0% down | Upfront MIP required | None (unless lender-paid PMI) |
| Minimum credit score | No VA minimum; lender overlays vary | 580 for 3.5% down; 500 with 10% down | |
| Max DTI guideline | 41%, secondary to residual income | ||
| Loan limit (2026) | None with full entitlement | $832,750 conforming | $832,750 conforming; jumbo above |
| Occupancy | Primary residence only | Primary residence only | Primary, second home, or investment |
| Seller concessions | 4% of reasonable value (closing cost credits unlimited) | ||
| Assumable | Yes | ||
| Prepayment penalty | Never | ||
| Eligible borrowers | Veterans, active duty, Guard/Reserve, surviving spouses | Anyone | Anyone |
Eligible Property Types and the VA Appraisal
The VA requires every property to meet Minimum Property Requirements focused on safety, sanitation, and structural soundness. A VA-assigned appraiser verifies both value and MPR compliance. This is not a home inspection.
| Property type | VA eligible? | Key conditions |
|---|---|---|
| Single-family home | Yes | Must meet MPRs |
| Condo | Yes, if in a VA-accepted project | The VA does not perform individual unit approvals; the entire project must be accepted by the VA prior to loan guaranty |
| 2-4 unit (multi-family) | Yes; Veteran must occupy one unit | Rental income from other units may be included at 75% if the borrower has landlord experience or a property manager, and documents six months of PITI reserves |
| Manufactured home | Potentially eligible | Homes not permanently affixed carry a 1.00% funding fee; permanently affixed homes use the standard purchase fee schedule; lender availability is limited |
| Investment property (not owner-occupied) | No | The VA requires primary residence occupancy |
MPR Categories
The VA Minimum Property Requirements cover dozens of categories. Key areas the appraiser evaluates include:
- Roof. Must prevent entrance of moisture and provide reasonable future utility, durability, and economy of maintenance.
- Mechanical systems. Safe electrical, plumbing, and heating systems in working order.
- Water and sanitation. Clean, reliable water supply and adequate sewage disposal.
- Lead-based paint. Homes built before 1978 require evaluation; any defective lead-based paint must be remediated.
- Structural soundness. No foundation issues, drainage problems, or geological instability.
- Hazards. No health or safety hazards including environmental problems, storage tanks, or high-voltage transmission lines.
Occupancy Rule
The Handbook defines occupancy “within a reasonable time” as within 60 days after the loan closing. More than 60 days may be considered reasonable if the Veteran certifies a specific future date and a particular future event makes occupancy possible at that date. Occupancy beyond 12 months after closing generally cannot be considered reasonable. Spouse or dependent child occupancy can satisfy the requirement for active-duty service members who cannot personally occupy within a reasonable time.
For the full property and appraisal guides, see VA MPR guide and VA appraisal guide.
VA Loan Types
The VA guarantees several loan structures. Each serves a different purpose.
- Purchase loan. For buying a primary residence. No down payment with full entitlement. VA appraisal required. The most common VA loan type: 323,832 purchase loans were guaranteed in FY2025. See the first-time buyer guide if this is your first purchase.
- IRRRL (Interest Rate Reduction Refinancing Loan). Refinances an existing VA loan, generally at a lower interest rate. The Handbook states: “generally, no appraisal, credit information or underwriting is required.” Funding fee is 0.50%.
- Cash-out refinance. Refinances any existing mortgage into a VA loan and can provide access to equity. Requires full appraisal and underwriting. Funding fee matches purchase rates.
- NADL (Native American Direct Loan). Direct financing from the VA for eligible Native American Veterans to buy, build, or improve a home on Federal Trust land. Funding fee is 1.25%.
- Construction loan. The VA permits one-time close and two-time close construction loans. One-time close loans establish permanent financing before construction begins. Offered by a limited number of lenders.
- Assumption. A qualified buyer (Veteran or not) can assume an existing VA loan at its original rate and terms. Loans committed on or after March 1, 1988, require approval by the VA or its designated lender. Funding fee on assumptions is 0.50%.
Full vs. Partial Entitlement and County Limits
With full entitlement, the VA guarantees 25% of any loan amount with no cap, and no down payment is required if the borrower qualifies financially.
With partial entitlement (when some entitlement is tied to a prior VA loan), the remaining available guaranty is reduced. The Handbook calculates it as: 25% of the county conforming loan limit, minus the amount of unrestored entitlement. The baseline conforming loan limit for 2026 is $832,750. When the available guaranty does not cover 25% of the new loan amount, the lender may require a down payment on the uncovered portion.
Entitlement can be restored after a VA loan is paid off or the property is sold. Veterans can hold two VA loans simultaneously using remaining entitlement for the second purchase. For details, see VA entitlement and VA loan limits.
The Buying Process
A VA purchase follows a sequence similar to other mortgages, with a few VA-specific steps.
- Confirm your COE pathway. Verify your likely eligibility before you are under contract. Your lender can pull the COE electronically.
- Choose your loan type. Purchase, IRRRL, or cash-out determines the structure and documentation requirements.
- Run an affordability check. Evaluate total monthly payment including taxes, insurance, and the funding fee if financed. See how much VA loan you can afford.
- Compare lenders. Request Loan Estimates from multiple VA lenders on the same assumptions (rate, points, credits, lock period). Check today’s VA loan rates and compare VA loan offers.
- Get pre-approved. Pre-approval means the lender has reviewed your income, credit, and assets. See VA pre-approval.
- Find a home and make an offer. Include the VA escape clause (mandatory), financing contingency, and inspection contingency.
- VA appraisal and underwriting. The VA assigns an appraiser to verify value and MPR compliance. The lender completes underwriting.
- Close and occupy. The VA requires intent to occupy as a primary residence within a reasonable time, generally 60 days after closing.
VA Loans by the Numbers (FY2025)
| Metric | FY2025 value |
|---|---|
| Total loans guaranteed | 528,340 |
| Purchase loans | 323,832 |
| Purchase loans without down payment | 240,749 (74.3% of purchase loans) |
| Average purchase loan amount | $398,416 |
| Total loan volume | $206.1 billion |
| First-time home buyers | 130,238 |
Frequently Asked Questions
What is a VA loan and how does it work?
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs. Private lenders fund the loan, and the VA guarantees a portion of it, which is why lenders can offer no down payment and no monthly mortgage insurance. You need a Certificate of Eligibility based on your Military service to use the benefit.
Who is eligible for a VA loan?
Veterans who meet the minimum service requirement for their era, active-duty service members with at least 90 continuous days of service, Guard and Reserve members with six creditable years or 90 days of qualifying active duty, and surviving spouses receiving DIC or whose spouse is MIA or POW. Discharge must be under other than dishonorable conditions.
Does the VA set a minimum credit score?
No. The VA Lender’s Handbook states: “VA does not have a minimum credit score requirement.” Lenders set their own minimums as overlays, and those minimums vary. The credit score requirement you encounter is the lender’s, not the VA’s.
How much can I borrow with a VA loan?
With full entitlement, there is no VA-imposed limit. The VA will guarantee 25% of any loan amount. The lender determines how much you can borrow based on your income, credit, and the property value. With partial entitlement, county-based conforming loan limits determine your zero-down ceiling.
What is the VA funding fee and who is exempt?
The funding fee is a one-time charge that supports the VA guaranty program. For a first-use purchase with no down payment, the fee is 2.15%. Veterans receiving VA disability compensation, active-duty Purple Heart recipients, and surviving spouses receiving DIC are exempt. The fee can be financed into the loan.
Can I use a VA loan more than once?
Yes. VA loan entitlement is reusable. After you pay off a VA loan or sell the home, your entitlement can be restored for another purchase. You can hold two VA loans simultaneously if you have remaining entitlement from a prior purchase.
What types of homes can I buy with a VA loan?
Single-family homes, condos in VA-accepted projects, two-to-four-unit properties where you occupy one unit, and manufactured homes on permanent foundations (with limited lender availability). The VA does not finance investment-only properties, vacant land alone, or mobile homes on leased park land.
What does the VA appraisal check?
The VA appraisal verifies the property’s market value and confirms it meets Minimum Property Requirements. Key MPR areas include the roof (must prevent moisture entrance and provide reasonable future utility), mechanical systems, water and sanitation, lead-based paint in pre-1978 homes, and structural soundness. The appraisal is not a home inspection.
What is the difference between seller concessions and closing cost credits?
The VA does not limit credits for closing costs. However, seller concessions, defined as anything of value added to the transaction that the seller is not customarily expected to pay, are capped at four percent of the property’s reasonable value. Normal discount points and payment of the buyer’s closing costs are not counted toward the four percent cap.
Do I need to live in the home?
Yes. The VA requires you to intend to personally occupy the property as your primary residence within a reasonable time, generally 60 days after closing. More than 60 days may be considered reasonable with a certified specific future date and event. Occupancy beyond 12 months after closing generally cannot be considered reasonable.
How We Researched This Page
Every fact on this page traces to a primary source fetched and read for this page. Service requirements come from VA.gov and the VA Annual Benefits Report FY2025 eligibility table. Funding fee rates and exemption categories come from VA.gov. Credit, DTI, and residual income rules come from the VA Lender’s Handbook (VA Pamphlet 26-7) Chapters 3, 4, 6, 7, 8, and 12, rendered from the KnowVA portal. The DTI and residual income regulatory language comes from 38 CFR 36.4340 (govinfo 2025 edition). The 2026 conforming loan limit comes from the FHFA news release. FHA comparison figures come from HUD FAQs and the CFPB. Conventional PMI rules come from the CFPB. Program volume data comes from the VA Annual Benefits Report FY2025, Loan Guaranty section. Where a source could not be fetched, the claim was removed.