VA loans: the basics
A VA-backed loan is a mortgage for eligible Veterans, service members and surviving spouses. Here is what it is, who can use it, and what it costs.*
What a VA loan is
A VA home loan is made by a private lender and backed by the U.S. Department of Veterans Affairs. VA says "nearly 90% of VA-backed loans are made with no down payment," as long as the sales price is not higher than the home's appraised value. VA loans do not need private mortgage insurance or mortgage insurance premiums. Borrowers still pay interest, a one-time funding fee unless exempt, and closing costs.
Who can use one
Eligibility depends on service history and duty status. As a general guide from VA:
- Active-duty service members: at least 90 continuous days of service.
- Veterans: minimum service depends on when you served. For service from August 2, 1990 to the present, it is generally 24 continuous months, or the full period you were called up (at least 90 days).
- National Guard and Reserve members: generally at least 90 days of active-duty service, or 6 creditable years of service.
- Surviving spouses: may qualify in certain cases.
A Certificate of Eligibility (COE) shows a lender that you qualify. VA makes the final decision on eligibility. Below, "How to get your Certificate of Eligibility" explains how to request one. See VA's eligibility page for the full rules.
How to get your Certificate of Eligibility
Buyers usually get their own COE and bring it to the lender. There are a few ways to request one:
- Online yourself, using VA's COE request form on VA.gov.
- By mail, with VA Form 26-1880. VA notes that mail requests can take longer than online or through a lender.
- Through a lender, in some cases. VA says a lender may be able to request it for you. Lenders differ, so ask yours whether it can.
However it is requested, VA needs proof of service, which the buyer provides. The usual documents are:
- Veterans: your DD214 discharge or separation papers.
- Active-duty service members: a statement of service signed by your commander, adjutant or personnel officer. It lists your full name, Social Security number, date of birth, date you entered duty, any lost time and the name of the command.
- National Guard and Reserve members: the documents depend on whether you were ever activated. For example, a DD214, or a signed statement of service showing your creditable years if you are still serving.
- Surviving spouses: a VA form and supporting papers such as a marriage license and the Veteran's death certificate.
Details vary by situation. See VA's COE page for the full list.
The VA funding fee
The funding fee is a one-time charge on a VA loan. It is a percent of the loan amount, and you can add it to the loan or pay it at closing. These are VA's published rates for purchase loans.
| Down payment | First use | Used before |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
From VA.gov, from a chart effective April 7, 2023. Rates for refinances and other loan types are different, and rates can change. Confirm the current fee with VA or your lender.
Some borrowers do not pay the fee. VA lists, for example, people who receive VA compensation for a service-connected disability, surviving spouses who receive Dependency and Indemnity Compensation, and active-duty members who show evidence of a Purple Heart on or before closing.
Closing costs and seller help
Your lender sets the interest rate, discount points and other closing costs. You and the seller can negotiate who pays items such as the origination fee, the VA appraisal fee, title insurance and recording fees. Sellers can offer credits, and VA caps seller concessions at 4% of the home's reasonable value shown on the VA Notice of Value. On a purchase, only the funding fee can be financed. Other closing costs are paid at closing.
Other things to know
- You must live in the home you buy with the loan.
- You must meet VA and lender standards for credit and income.
- The loan can be used for a single-family home up to 4 units, a condo in a VA-approved project, a manufactured home or lot, or a new build.
- VA also offers an interest rate reduction refinance and a cash-out refinance for existing VA loans.
Questions to ask a lender
- Do you need my Certificate of Eligibility before I get started, and what other documents do you need from me?
- How much is my funding fee? What does it cost me if I add it to the loan, compared with paying it at closing?
- What are the interest rate, points and closing costs on my Loan Estimate?
- How much can the seller pay toward my costs on this loan?
* General information only, not a loan offer, a commitment to lend or a Certificate of Eligibility. This site is not affiliated with, endorsed by or sponsored by the U.S. Department of Veterans Affairs or any government agency. VA loan terms and fees are set by VA and can change. Eligibility, rates and approval depend on service history, credit, income, the property and the lender, and are not guaranteed. Source for VA facts: VA.gov. Sinjo Thomas, NMLS #2680792, C2 Financial Corporation, NMLS #135622. See disclosures.
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