VA Loan

A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs, available exclusively to eligible military service members, veterans, and certain surviving spouses. It's one of the most favorable loan products in the US market, with terms unmatched by any other program.

For qualifying borrowers, VA loans offer benefits no other loan can match: zero down payment, no private mortgage insurance, competitive rates, and flexible credit standards. The VA's federal guarantee makes lenders more willing to extend favorable terms.

VA loan benefits

• Zero down payment. Most VA loans require no down payment up to the conforming loan limit.
• No PMI/MIP. Unlike FHA (which requires lifetime MIP) or conventional below 20% down (which requires PMI), VA loans have no monthly mortgage insurance.
• Competitive rates. VA rates are typically among the lowest in the market, comparable to or below conventional.
• Flexible credit standards. Most VA lenders accept credit scores 620+, some down to 580, with strong residual income.
• No prepayment penalty. Pay off early without penalty.
• Reusable benefit. The VA loan benefit can be used multiple times across a lifetime (with restoration after each previous VA loan is paid off).

Who qualifies for VA loans

Eligibility extends to:

• Active-duty service members — typically after 90 continuous days of active service
• Veterans — varying minimum service requirements depending on era
• National Guard and Reserve members — typically after 6 years of service or specific active-duty triggers
• Surviving spouses of veterans who died in service or from service-connected disabilities

Qualifying borrowers must obtain a Certificate of Eligibility (COE) from the VA — typically pulled by the lender during the loan process.

VA funding fee

Instead of mortgage insurance, VA loans have a one-time funding fee paid at closing. Critically, veterans with VA disability ratings of 10% or higher are typically exempt from the funding fee entirely — a significant benefit that effectively eliminates the largest upfront cost on VA loans.

For non-exempt borrowers, the funding fee structure ranges from 0% to 3.30% based on scenario:

• First use, 0% down: 2.15% of loan amount
• Subsequent use, 0% down: 3.30% of loan amount
• 5% down: 1.50% of loan amount
• 10%+ down: 1.25% of loan amount
• VA disability 10%+: Exempt (0%)

The funding fee can be financed into the loan rather than paid out of pocket at closing. Most non-exempt VA borrowers do this because the zero-down structure is the primary appeal. Exempt borrowers (10%+ disability rating) skip this entirely — making VA the most cost-favorable loan product available to qualifying veterans.

VA loan limits

Since 2020, qualifying borrowers with full entitlement face no maximum loan limit on VA loans. You can buy a $1M+ property with $0 down if your income supports the payment. Borrowers with partial entitlement (existing VA loan, default history) face conforming loan limits.

VA loan limitations

• Owner-occupancy required. The property must be your primary residence. VA loans don't fund pure investment properties.
• Property condition standards. VA appraisers inspect for safety and habitability. Properties with significant deferred maintenance can fail VA appraisal.
• One VA loan at a time in most circumstances (with exceptions for relocation).

VA loans in investor strategies

Investors with VA eligibility use the benefit strategically:

House hacking with VA. Buy a 2-4 unit property as owner-occupied with $0 down VA financing. Live in one unit, rent the others. The combination of zero-down + rental income from other units is among the most capital-efficient strategies available.

Primary residence anchor. Use VA on your primary residence to free up conventional/DSCR capacity for investment properties.

Sequential VA usage. Move and use VA again on a new primary residence, converting the old VA-financed property to a rental (legitimate after 12+ months of owner-occupancy). Repeat across moves.

Rate Hero's take

If you're VA-eligible and buying or refinancing your primary residence, VA is almost always the optimal choice — better than conventional, better than FHA, comparable to or better than any other product available. We'll pull your Certificate of Eligibility, compare VA vs. conventional pricing, and confirm VA is the right call for your scenario. For investor strategies layered on VA primary residences, we structure the long-term plan: VA for residence, DSCR for the rest of the portfolio.