10 Things You Must Know About VA Home Loans

VA loans provide an affordable, flexible, and accessible path to homeownership, often with terms that far surpass traditional mortgages. But as with any financial product, understanding the details is essential before you decide to apply.

In this article, we’ll break down the 10 most important things you must know about VA home loans so you can make informed decisions about your journey to homeownership.

1. What Is a VA Home Loan?

A VA home loan is a mortgage option backed by the U.S. Department of Veterans Affairs. Unlike conventional loans, VA loans don’t come directly from the VA. Instead, they’re issued by private lenders (like banks and credit unions), with the VA guaranteeing a portion of the loan.

This guarantee reduces risk for lenders and gives eligible borrowers significant advantages, such as no required down payment and no private mortgage insurance (PMI).

Key benefits of VA loans include:

No down payment required (in most cases).
Competitive interest rates.
No PMI.
Flexible credit requirements.
Limits on closing costs.

Key takeaway: VA loans are designed to make homeownership easier for veterans and military families by reducing the financial barriers associated with traditional mortgages.

2. Who Is Eligible for a VA Loan?

Not everyone qualifies for a VA home loan. Eligibility depends on your service history, duty status, and length of service.

You may be eligible if you are:

An active-duty service member.
A veteran who meets minimum service requirements.
A current or former member of the National Guard or Reserves.
A surviving spouse of a veteran (in certain cases).

Typical service requirements:

90 consecutive days of active service during wartime.
181 consecutive days of active service during peacetime.
6 years of service in the National Guard or Reserves.

Example: A Marine Corps veteran who served 120 days during the Gulf War would likely be eligible, as would a surviving spouse of a veteran who died in the line of duty.

Tip: You’ll need a Certificate of Eligibility (COE) to apply. This document proves to lenders that you qualify for VA benefits.

3. No Down Payment Requirement

One of the biggest advantages of a VA loan is the ability to buy a home without a down payment. Traditional mortgages typically require 3–20% down, which can be a significant financial burden.

Example:

On a $300,000 home:
- A 20% down payment = $60,000 (conventional loan).
- VA loan down payment = $0.

This benefit alone can save veterans and their families years of saving and make homeownership accessible much sooner.

Key takeaway: The no-down-payment feature is unique to VA loans and one of the reasons they’re considered the best mortgage option for veterans.

4. No Private Mortgage Insurance (PMI)

Conventional loans with less than 20% down typically require PMI, an insurance policy that protects the lender if you default. PMI can cost hundreds of dollars per month, depending on loan size.

With a VA loan:

PMI is not required, regardless of your down payment size.

Example: On a $250,000 loan, avoiding PMI could save $100–$200 monthly, or $12,000–$24,000 over 10 years.

Key takeaway: VA loans reduce the long-term cost of homeownership by eliminating PMI.

5. Competitive Interest Rates

VA loans generally come with lower interest rates compared to conventional and FHA loans. Because the VA guarantees part of the loan, lenders are willing to offer more favorable terms.

Average comparison (example):

Conventional loan: 6.5%
FHA loan: 6.25%
VA loan: 6.0%

Even a small difference in rates can mean thousands in savings over the life of the loan.

Example: On a $250,000 loan over 30 years, lowering your rate from 6.5% to 6.0% could save nearly $26,000 in interest.

6. VA Loans Come With a Funding Fee

While VA loans eliminate PMI and down payments, they do include a funding fee (a one-time cost to help sustain the program).

Funding fee rates vary:

First-time use with no down payment: 2.15% of loan amount.
Subsequent use with no down payment: 3.3%.
With a 5% down payment: 1.5%.
With a 10% down payment: 1.25%.

Example: On a $200,000 loan with no down payment, the funding fee = $4,300.

Exceptions:

Veterans with service-related disabilities.
Surviving spouses of veterans who died in service.

Tip: The funding fee can be rolled into the loan rather than paid upfront.

7. VA Loans Can Be Used Multiple Times

A common misconception is that VA loans are a one-time benefit. In fact, you can use the program multiple times as long as you still meet eligibility requirements.

If you sell your home and pay off your VA loan, your full entitlement is restored.
If you still own a home with a VA loan, you may be able to use remaining entitlement for another purchase.

Example: A veteran buys a $200,000 home with a VA loan, later sells it, and then buys a $350,000 home using the program again.

Key takeaway: VA loans can be a lifelong benefit, not just a one-time option.

8. Property Requirements and Restrictions

VA loans are designed for primary residences only. You cannot use them for:

Vacation homes.
Rental investment properties.

The VA also has Minimum Property Requirements (MPRs) to ensure homes are safe, sanitary, and structurally sound.

Examples of MPRs:

Reliable heating and roofing.
No major electrical or plumbing hazards.
Adequate living space and access to clean water.

Tip: If you’re considering a fixer-upper, a VA renovation loan may be an option, though it’s less common.

9. Closing Costs Are Limited

While VA loans don’t eliminate closing costs entirely, they do cap certain fees lenders can charge. This protects borrowers from excessive out-of-pocket expenses.

What VA borrowers don’t pay:

Prepayment penalties.
Certain lender fees beyond a set limit.

What you may still pay:

Appraisal fees.
Title insurance.
Recording fees.

Example: On a $250,000 loan, conventional buyers may pay $7,000 in closing costs, while VA buyers might pay closer to $5,000.

Key takeaway: VA loan rules ensure closing costs remain manageable.

10. VA Loans Are Assumable

Another unique feature is that VA loans are assumable, meaning a qualified buyer can take over your loan, including its interest rate and terms.

This can be especially attractive in a rising-rate environment.

Example: If you have a VA loan at 4% and sell your home when market rates are 7%, a buyer might eagerly assume your loan, giving you a competitive advantage.

Tip: Only VA-eligible borrowers can assume VA loans without impacting your entitlement.

Additional Advantages of VA Loans

Flexibility with credit: VA loans are more forgiving of lower credit scores compared to conventional loans.
No prepayment penalties: You can pay off your loan early without fees.
Surviving spouse benefits: In some cases, surviving spouses can use VA loan benefits.
Refinancing options: The VA Interest Rate Reduction Refinance Loan (IRRRL) allows you to refinance to a lower rate with minimal paperwork.

Common Misconceptions About VA Home Loans

“VA loans take too long to process.” – Timelines are comparable to conventional loans when working with experienced lenders.
“You can only use it once.” – False; benefits can be used multiple times.
“They’re only for combat veterans.” – Many active-duty, Reserve, and National Guard members also qualify.
“VA loans are only for cheap homes.” – There are no official loan limits (though lenders may have their own caps).

Conclusion

The VA home loan program is one of the most powerful benefits available to veterans and military families. It removes many of the financial hurdles of homeownership, from down payments to PMI, while offering competitive interest rates and protections that save borrowers money.

By understanding these 10 essential things about VA home loans, you’ll be better prepared to take advantage of the program:

What VA loans are.
Eligibility requirements.
No down payment.
No PMI.
Competitive interest rates.
The funding fee.
Multiple uses allowed.
Property requirements.
Limits on closing costs.
Loan assumability.

If you’re a veteran, active-duty service member, or qualifying family member, the VA home loan program may be the key to achieving the American dream of homeownership—without the heavy financial burden that often comes with traditional mortgages.