Key Takeaways
- Zero down payment: VA loans require $0 down — conventional loans require $9,000-$15,000+ on a $300,000 home
- No PMI: Save $150-$400/month compared to conventional loans with less than 20% down
- Total savings: Veterans save $30,000-$90,000 over 30 years compared to conventional financing
- Lower rates: VA loans average 0.47% below conventional rates (5.50-5.75% vs 6.22% in January 2026)
- 2026 loan limits: $806,500 standard, $1,209,750 high-cost areas — or unlimited with full entitlement
- Funding fee: 2.15% first use (0% down), 1.25% with 10%+ down — disabled veterans pay 0%
Quick Answer
On a $400,000 home with zero down payment at today's VA rate of 5.75%, your monthly principal and interest is approximately $2,334. Including the funding fee ($8,600 financed), your total loan is $408,600 with a payment of $2,384. Compare this to a conventional loan requiring $12,000+ cash for the down payment alone, plus $200-$300/month in PMI.
Table of Contents
Understanding VA Loan Basics in 2026
VA home loans represent one of the most valuable benefits available to service members, veterans, and eligible surviving spouses. Since 1944, the program has backed over 22 million home loans.
Here's the key insight: The VA doesn't actually lend money. Instead, they guarantee a portion of loans issued by private lenders. This reduces lender risk and enables benefits that no other loan type can match.
The 2020 Game-Changer
The Blue Water Navy Vietnam Veterans Act eliminated loan limits for veterans with full entitlement. Veterans with full, unused entitlement can now borrow any amount a lender approves with zero down payment — with no VA-imposed ceiling.
What Makes VA Loans Revolutionary
No other loan program offers all of these simultaneously:
VA Loan Advantages
- 0% down payment — buy a home without years of saving
- No private mortgage insurance — save $150-$400/month
- Competitive rates — typically 0.3-0.5% below conventional
- Flexible credit requirements — no VA minimum credit score
- Limited closing costs — VA restricts what veterans can be charged
- Seller concessions — up to 4% of purchase price beyond closing costs
- Lifetime benefit — use it repeatedly, not just once
August 2024 Update: The VA now allows veterans to pay buyer-broker fees following the National Association of Realtors settlement, keeping VA buyers competitive in all markets.
Who Qualifies for VA Loans: Eligibility Requirements
Eligibility depends on your service type and duration. Here's exactly who qualifies:
Service Requirements by Era
- Gulf War to present (Aug 2, 1990-today): 24 continuous months active duty, OR full period called to duty (min 90 days), OR discharge for service-connected disability
- Vietnam-era veterans: Just 90 days of service
- Peacetime service (1980-1990): 181 continuous days
Other Eligible Groups
| Group | Requirement |
|---|---|
| Active Duty | 90 continuous days of service |
| National Guard/Reserves | 90 days Title 10 orders OR 6 creditable years |
| Surviving Spouses | Receiving DIC, or spouse is MIA/POW |
Discharge Status Matters
Honorable and general discharges qualify. Other-than-honorable, bad conduct, or dishonorable discharges do not qualify for VA loan benefits.
Certificate of Eligibility (COE)
The COE proves your qualification and shows available entitlement. Most veterans get it through their lender in minutes via the VA's Web LGY system.
Other options:
- Online at VA.gov: 1-2 days processing
- By mail (Form 26-1880): 4-6 weeks
You don't need the COE before house hunting, but must have it before closing.
VA Funding Fee 2026: What You'll Actually Pay
The VA funding fee is a one-time charge that keeps the program self-sustaining without taxpayer funding. The good news? You can finance it into your loan — no upfront cash required.
2026 VA Funding Fee Rates
First-time use, 0% down: 2.15%
Subsequent use, 0% down: 3.30%
With 5% down: 1.50%
With 10%+ down: 1.25%
IRRRL refinance: 0.50%
Funding Fee Examples
| Home Price | Down Payment | Fee Rate | Fee Amount |
|---|---|---|---|
| $400,000 | 0% | 2.15% | $8,600 |
| $400,000 | 5% ($20,000) | 1.50% | $5,700 |
| $400,000 | 10% ($40,000) | 1.25% | $4,500 |
| $500,000 | 0% | 2.15% | $10,750 |
Who Pays Zero Funding Fee
- Veterans with 10%+ service-connected disability rating
- Surviving spouses of veterans who died in service or from service-connected disability
- Active duty Purple Heart recipients
Approximately 35-40% of VA loan recipients pay no funding fee.
VA Loan Limits 2026: How Much Can You Borrow?
Here's where VA loans really shine compared to conventional financing.
No Limits for Full Entitlement
Veterans with full entitlement face no loan limits. You can borrow any amount a lender approves with zero down payment. Full entitlement means you've never used a VA loan, or you've sold a previous VA-financed home and fully paid off the loan.
Partial Entitlement Limits (2026)
If you have partial entitlement (existing VA loan not yet paid off, or haven't restored entitlement), conforming limits apply:
Standard Counties
$806,500
2026 zero-down limit
High-Cost Areas
$1,209,750
Areas like San Francisco, NYC
How Partial Entitlement Math Works
Here's the formula:
- The VA guarantees 25% of loans over $144,000
- Maximum entitlement in standard counties: $201,625 (25% of $806,500)
- If you've used $60,000 on an existing VA loan, remaining entitlement: $141,625
- Multiply by 4 for zero-down buying power: $566,500
- Above that requires 25% down on the excess amount
VA vs Conventional vs FHA: The Real Cost Comparison
Numbers don't lie. Let's compare a $400,000 home purchase:
VA Loan
- Down payment: $0
- Loan amount: $408,600 (includes funding fee)
- Rate: 5.75%
- Monthly P&I: $2,384
- PMI: $0
- Total monthly: $2,784
Conventional (3% Down)
- Down payment: $12,000
- Loan amount: $388,000
- Rate: 6.22%
- Monthly P&I: $2,385
- PMI: $243/month
- Total monthly: $3,028
FHA (3.5% Down)
- Down payment: $14,000
- Loan amount: $392,737 (includes MIP)
- Rate: 5.97%
- Monthly P&I: $2,352
- Annual MIP: $180/month
- Total monthly: $2,932
30-Year Cost Comparison ($400,000 Home)
- Conventional costs $244/month more than VA ($87,840 over 30 years)
- FHA costs $148/month more than VA ($53,280 over 30 years)
- Factor in VA's lower rates — another $30,000-$40,000 saved
- Total VA advantage: $30,000-$90,000+ over the loan's life
The Bottom Line: VA loans save $244/month compared to conventional loans — that's $2,928 per year you keep in your pocket. Over 30 years, you're looking at $88,000+ in savings, not including the lower interest rate advantage.
Credit Score & DTI Requirements
VA loans are more flexible than most people realize. Here's what actually matters:
Credit Score Requirements
VA Credit Score Reality
The VA sets no minimum credit score. Individual lenders set their own requirements, typically 580-620. Some VA specialists work with scores as low as 550 using manual underwriting.
Debt-to-Income (DTI) Ratio
DTI matters, but residual income matters more.
The VA prefers DTI at or below 41%, but this is a guideline, not a hard limit. Lenders regularly approve DTIs up to 50% or even 60% with strong compensating factors.
What is Residual Income?
The cash remaining after paying all debts, taxes, and mortgage payments. Requirements vary by region and family size.
- Example: Family of four in the Midwest with loan above $80,000 needs $1,003 monthly residual income
- If DTI exceeds 41%: Residual income must be 120% of requirement ($1,204 in this example)
Military Income Advantage
BAH, BAS, and VA disability compensation are non-taxable and can be "grossed up" by 25%.
Example: If you receive $1,500 monthly BAH, lenders count it as $1,875 for qualification — significantly boosting your buying power.
Closing Costs and Seller Concessions
VA loans protect veterans from excessive closing costs. Here's how:
Typical VA Closing Costs
VA loan closing costs typically range from 3-5% of loan amount, or $12,000-$20,000 on a $400,000 loan. The VA caps origination fees at 1% and restricts certain "non-allowable fees" that veterans cannot be charged.
Allowable vs Non-Allowable Fees
✅ Veterans CAN Pay
- VA funding fee
- Origination fee (up to 1%)
- Appraisal ($400-$900)
- Credit report ($50-$110)
- Title insurance
- Recording fees
- Prepaid taxes/insurance
❌ Veterans CANNOT Pay
- Lender attorney fees
- Rate lock fees
- Document prep charges beyond 1% origination
- Various processing fees
Seller Concessions Explained
The 4% Rule Explained
Sellers can pay unlimited standard closing costs plus up to 4% in additional concessions.
- Standard closing costs (origination, appraisal, title) — no limit
- 4% cap applies only to: paying off buyer debts, covering funding fee, discount points, temp rate buydowns, prepaids beyond standard costs
- Example: On $400,000 purchase, seller could pay $13,000 in closing costs + $16,000 in concessions = $29,000 total
Common VA Loan Myths Debunked
These outdated misconceptions cost veterans money. Let's set the record straight:
Myth #1: "VA loans are only for first-time buyers"
❌ The Myth:
You can only use your VA benefit once.
✅ The Reality:
VA benefits last your lifetime and can be used repeatedly. Veterans commonly use VA loans for starter homes, upgrades after promotions, purchases following PCS relocations, and refinancing. You can even have two VA loans simultaneously with sufficient entitlement.
Myth #2: "You need perfect credit for VA loans"
❌ The Myth:
Only people with 780+ credit scores qualify.
✅ The Reality:
The VA sets no credit score minimum. Lenders regularly approve scores as low as 580-620, and some specialists work with 550+ scores using manual underwriting. VA guidelines emphasize evaluating the complete financial picture.
Myth #3: "VA appraisals cause delays"
❌ The Myth:
VA appraisals take forever and are overly strict.
✅ The Reality:
VA appraisals take 7-21 business days on average — comparable to conventional timelines. VA Minimum Property Requirements ensure homes are safe, sound, and sanitary — reasonable standards protecting veterans from purchasing uninhabitable properties.
Myth #4: "Sellers don't want VA buyers"
❌ The Myth:
VA loans are too complicated and risky for sellers.
✅ The Reality:
VA loans close at 74.3% vs 74.1% for all mortgages. Average closing time: 47 days for VA vs 43 days conventional — just 4 days difference. VA loans are backed by the federal government, making them LESS risky for sellers.
Myth #5: "The funding fee makes VA loans more expensive"
❌ The Myth:
Paying $8,600 upfront is worse than PMI.
✅ The Reality:
The funding fee is one-time vs PMI's ongoing monthly drain. Conventional PMI costs $150-$400/month, totaling $18,000-$48,000 before cancellation at 20% equity. VA loans save tens of thousands even with the funding fee — especially with lower interest rates averaging 0.47% below conventional.
Step-by-Step VA Loan Process
Timeline Overview
The VA loan journey takes 30-50 days from contract to closing — comparable to conventional loans. Experienced VA lenders close in as little as 25-30 days.
Step 1: Pre-Qualification (1 Day)
Initial conversation with your lender about income, credit, and budget. This informal estimate helps you understand purchasing power before serious house hunting.
Step 2: Certificate of Eligibility
Your lender can request it through VA's Web LGY system — often instant approval. You don't need this before house hunting, but must have it before closing.
Step 3: Pre-Approval (7-10 Days)
Lenders verify income (pay stubs, W-2s), review tax returns, pull credit, and confirm assets. Pre-approval provides the strongest position when making offers.
Step 4: Home Search & Offer
Work with a VA-experienced agent who understands Minimum Property Requirements. Submit purchase contract with financing, appraisal, and inspection contingencies.
Step 5: VA Appraisal (7-21 Days)
VA-approved appraiser establishes fair market value and ensures property meets safety, soundness, and sanitation standards.
Critical Point
VA appraisals are NOT home inspections. Always obtain a separate professional home inspection ($300-$500).
Step 6: Underwriting (2-3 Weeks)
Reviews all documentation. Most VA lenders have automatic authority — they evaluate applications themselves using VA guidelines, not submitting each loan to the VA.
Step 7: Closing (1-2 Hours)
Sign documents at title company, pay remaining costs, receive your keys. Congratulations — you're a homeowner!
VA Loan Refinancing: IRRRL and Cash-Out Options
Interest Rate Reduction Refinance Loans (IRRRL)
Also called "VA Streamline Refinances," IRRRLs (pronounced "earl") enable veterans to refinance existing VA loans to lower rates with minimal documentation.
IRRRL Benefits
- Funding fee: Just 0.50% — lowest in VA program
- Closing time: 2-4 weeks typically
- No new COE required
- No appraisal in most cases
IRRRL Requirements
- Existing VA loan on the property
- Certification you previously occupied home as primary residence
- Net tangible benefit (lower payment OR moving from adjustable to fixed rate)
- On-time payments for previous 12 months
VA Cash-Out Refinances
Allows you to tap home equity while accessing VA benefits. Unlike IRRRLs, these require full documentation: new COE, appraisal, credit report, and income verification.
Funding fee matches purchase loans: 2.15% first use, 3.30% subsequent. You can refinance any existing mortgage — conventional, FHA, or VA — into a new VA cash-out refinance, borrowing up to 100% of appraised value.
Frequently Asked Questions
Can I have two VA loans at the same time?
Yes, if you have sufficient remaining entitlement. This commonly occurs when military families PCS to new duty stations before selling their previous home. After occupying the first home for 12 months, you can rent it out and use remaining entitlement for a second VA loan at your new location.
What happens to my VA benefit if I get divorced?
Your VA loan eligibility remains intact regardless of divorce. If your ex-spouse remains in a VA-financed home, your entitlement stays tied to that loan until it's paid off or sold. You may still qualify for another VA loan using remaining entitlement, or petition for one-time restoration if your ex refinances to a non-VA loan.
Can I use a VA loan to buy a fixer-upper?
Only if the property meets VA Minimum Property Requirements at purchase time. Homes needing major repairs typically won't qualify until issues are fixed. Consider the VA Renovation Loan (similar to FHA 203k) for properties requiring significant work, though fewer lenders offer this product.
How long does VA loan approval take?
Pre-approval takes 7-10 days. Once under contract, closing occurs in 30-50 days typically — just 4-6 days longer than conventional loans on average. Experienced VA lenders can close in 25-30 days.
Do I lose my VA benefit if I foreclosed on a previous VA loan?
No, but you must wait two years and repay the VA for any losses they covered. After meeting these requirements, your benefit can be restored. This is a temporary setback, not permanent disqualification.
Can I rent out my home purchased with a VA loan?
Yes, after satisfying the occupancy requirement. You must occupy the home as primary residence for at least 12 months. After this period, you can rent the property while using remaining entitlement for another VA loan if relocating.
What's the maximum VA loan amount I can get?
Veterans with full entitlement have no maximum — you can borrow any amount a lender approves based on income and credit. Lenders still evaluate affordability, but the VA imposes no ceiling for those with full entitlement.
Does the VA funding fee count toward the 4% seller concession limit?
Yes, if you negotiate for the seller to pay it. However, sellers can pay all standard closing costs without limit — the 4% cap only applies to additional concessions like paying off debts, discount points, or the funding fee.
VA Mortgage Calculator Summary
What you need to know:
VA loans offer zero down payment, no PMI, and rates averaging 0.47% below conventional mortgages. For a $400,000 home, that means saving $244/month compared to conventional financing — approximately $88,000 over 30 years.
Key numbers for 2026:
- Funding fee: 2.15% first use (0% down), 1.25% with 10%+ down
- 35-40% of VA borrowers pay no funding fee (disability exemption)
- Loan limits: $806,500 standard, $1,209,750 high-cost — or unlimited with full entitlement
- Closing time: 30-50 days (comparable to conventional)
Best practices:
- Get your COE through your lender for fastest processing
- Shop 3+ VA lenders — rate differences of 0.25% save $20,000+ over 30 years
- Consider voluntary down payment to reduce funding fee
- Request seller concessions — up to 4% beyond closing costs
- Work with a VA-experienced real estate agent
Next Steps
Your military service earned you one of America's most valuable home buying benefits. Here's how to put it to work:
Calculate Your VA Loan Payment
Related Calculators
Helpful Resources
- VA Home Loans — Official VA home loan information
- VA Loan Eligibility — Check your eligibility requirements
- Certificate of Eligibility — How to obtain your COE
- CFPB Homeownership Resources — Official consumer protection info