The VA home loan benefit is one of the most valuable benefits earned through military service. Here is how it works at a high level. Your lender and the Department of Veterans Affairs determine your actual eligibility, terms, and costs — I'm a real estate broker, not a lender, and I'm always happy to connect you with experienced VA lenders.
Who makes the loan?
VA purchase loans are made by private lenders such as banks, credit unions, and mortgage companies. The VA guarantees part of the loan, which is what allows lenders to offer favorable terms.
Key benefits, according to the VA
- No down payment required in many cases, as long as the sales price doesn't exceed the appraised value
- No private mortgage insurance (PMI)
- Limited closing costs, and sellers may pay some of them
- No penalty for paying the loan off early
Key requirements
- A Certificate of Eligibility (COE) based on your service
- Meeting the lender's credit and income standards
- Intending to live in the home as your primary residence
- A VA appraisal of the property
The VA funding fee
Most borrowers pay a one-time VA funding fee, which can be paid at closing or financed into the loan. Some borrowers are exempt — for example, veterans receiving VA compensation for a service-connected disability. Check VA.gov for current rates and the full list of exemptions.
Eligible property types
VA loans can be used for single-family homes and properties of up to four units (if you live in one), VA-approved condominiums, and certain new construction and manufactured homes. Buying a duplex, triplex, or fourplex and living in one unit is a strategy some military buyers use.
David Wahlers is a licensed real estate broker, not a mortgage lender, loan officer, or VA representative. Loan eligibility, terms, and fees are determined by your lender and the VA.
This article is general information, not legal, tax, or financial advice.