Why VA is better

If you're a veteran, active-duty service member, or in some cases a surviving spouse, the VA loan is one of the best benefits available when it comes to buying a home.

It’s backed by the Department of Veterans Affairs, which doesn’t lend the money directly but guarantees part of the loan so private lenders can offer better terms with less risk on their side.

That guarantee is what makes zero down payment possible in most cases, and what allows for more flexible approval compared to other types of loans.

No down payment. No mortgage insurance

No down payment, no monthly mortgage insurance, and in most cases a better rate than FHA or conventional if your credit is solid.

The funding fee

There’s a one-time funding fee, which can be rolled into the loan, but if you have a VA disability rating of 10 percent or higher, the funding fee is waived entirely.

If you aren't exempt, here are some charts to show what the funding fee is

Purchase and Construction Loans

Down Payment	First Use	Subsequent Use
None	2.15%	3.30%
5% or more	1.50%	1.50%
10% or more	1.25%	1.25%

Cash-Out Refinance Loans

Usage	Funding Fee
First Use	2.15%
Subsequent Use	3.30%

IRRRL stands for interest rate reduction refinance loan. This is if you're just refinancing to a lower rate, without taking cash out.

Loan Type	Funding Fee
IRRRL	0.50%

Credit score

There’s technically no minimum credit score required by the VA itself, but lenders still apply their own overlays, and most want at least a 620 though some will go lower depending on the full file.

If you have a low credit score and are looking for a VA loan, check with a mortgage broker first. Mortgage brokers will do the heavy lifting in shopping for a lender that will lend below the usual 620 score.

If you need help finding a good mortgage broker, fill out this form and I'll get you connected with a good one.

Minimum service requirement

A lot of people assume VA loans are only for career military or people who’ve been deployed in combat zones, but eligibility is broader than that and depends on your type of service, how long you served, and when you served.

The easiest way to confirm is to request your Certificate of Eligibility (COE), but here’s what usually qualifies.

Service Type	Minimum Service Requirement	Notes
Active Duty (Current or Veteran)	90 continuous days	Still serving or honorably discharged
Veteran (Wartime Service)	90 days active duty	Must be during wartime periods (e.g., Vietnam, Gulf War)
Veteran (Peacetime Service)	181 days active duty	Must be during peacetime periods (e.g., post-Vietnam, pre-Gulf)
National Guard or Reserves (Not Activated)	6 years service	Unless discharged for service-connected disability
National Guard or Reserves (Activated – Title 10)	90 days active duty	Federal active duty (Title 10) required
National Guard (Activated – Title 32)	90 days active duty (30 consecutive)	COVID/disaster response may qualify
Surviving Spouse	Varies (no remarriage before age 57)	Spouse must have died in service or from a service-connected disability

Debt to income

The VA also has its own way of evaluating affordability called residual income, which is different from standard debt-to-income ratios and allows for some flexibility as long as there’s enough income left over after all monthly expenses are accounted for.

Easy way to think about this: Residual for VA (What's left over) vs DTI (Debt to income percentage) for FHA, USDA, and conventional.

Loan limits

One thing people don’t always realize is that VA loans don’t have a loan limit anymore if you have full entitlement.

That changed in 2020 with the Blue Water Navy Act, so as long as you haven’t used your VA loan benefit already or it’s been fully restored, you can go above county limits with no cap on the loan amount.

But if you still have a VA loan on another property or have used part of your entitlement and not restored it, then you’re subject to loan limits based on your county and how much entitlement you have left.

That becomes especially important if you’re trying to buy a second home with VA financing or keep a current VA loan while buying another property.

This is just a piece of a developing library of tools, guides, and other resources for first time homebuyers. Here's the full library

Appraisal

The home has to meet the VA’s minimum property requirements.

This isn't a full inspection but more of a health and safety screening during the appraisal. Things like no exposed wiring, functional heat, safe water supply, no major roof issues or structural concerns.

It doesn't replace a home inspection and buyers should still hire their own inspector to catch anything the appraiser won't flag.

Assumption

VA loans are assumable, which means another buyer can take over your VA loan and interest rate if they qualify, and this might become a bigger deal if rates stay high and more buyers start looking for creative ways to get a lower payment.

But there’s a catch:

If the person assuming the loan is not a veteran with their own entitlement, then your entitlement stays tied up in that mortgage until it’s paid off, which can prevent you from using your VA loan again later.

Always check how assumption will impact entitlement before agreeing to it.

Co-signer that isn't a spouse

If you're buying with someone else, VA loans work best with a spouse or another eligible veteran.

You can use a joint VA loan with someone who isn't your spouse or another veteran, but those are manually underwritten and only partially guaranteed by the VA, so many lenders avoid them or add stricter guidelines.

Seller concessions

VA also limits seller concessions to 4 percent of the purchase price.

If there are excess seller credits left over after covering allowable costs, that money can be applied directly toward the buyer’s existing debt, as long as it fits within the 4 percent cap.

That can be a powerful tool for someone trying to improve their overall financial position while buying a home.

Energy Efficient

There’s also a little-known option to finance energy-efficient improvements with the VA loan. Up to $6,000 extra for things like insulation, storm windows, or solar panels.

It’s called an energy-efficient mortgage add-on, and it’s rarely used but can be a smart move if you’re buying a home and planning to make it more efficient right away.

Summary

Like any loan program, VA loans work best when your lender knows how to navigate the guidelines and structure the file to avoid delays or extra conditions.

There are some rules that make it stricter in certain areas, but when used correctly, it’s one of the most powerful mortgage tools out there, especially for first-time buyers or anyone with limited cash for a down payment.

If you need help finding a good mortgage broker that can offer a VA loan, fill out this form and I'll get you connected with a good one.