VA Loans: Benefits, Eligibility, and How to Use Them
If you are eligible, VA (Department of Veterans Affairs) loans offer some of the best mortgage terms available anywhere: no down payment, no PMI (private mortgage insurance), competitive rates, and flexible qualification. Here is how to determine eligibility and use the benefit.
Eligibility
Active duty service members (90+ days during wartime, 181+ days during peacetime). Veterans who served the minimum required time and were not dishonorably discharged. National Guard and Reserve members with 6+ years of service (or 90+ days of active duty). Surviving spouses of service members who died in service or from a service-connected disability. You need a Certificate of Eligibility (COE) from the VA — your lender can usually pull this for you.
Key Benefits
No down payment required (up to the conforming loan limit). No PMI, ever. Typically lower interest rates than conventional loans. No prepayment penalties. Limited closing costs (the VA restricts what lenders can charge). The VA appraisal also serves as a basic property inspection with minimum property requirements.
The Funding Fee
VA loans charge a one-time funding fee (1.25-3.3% of the loan amount) instead of mortgage insurance. First-time use with no down payment is 2.15%. The fee is lower with a down payment and higher for subsequent uses. Veterans with a service-connected disability are exempt from the funding fee entirely. The fee can be rolled into the loan.
Common Misconceptions
You can use a VA loan more than once — your benefit is reusable. VA loans are not only for first-time buyers. You can use a VA loan for condos (if VA-approved), manufactured homes, and even to build. VA loans do not take longer to close than conventional loans when you work with an experienced VA lender.
Key Takeaways
- ✓VA loans offer no down payment, no PMI, and competitive rates
- ✓Eligibility is based on service time and discharge status — get your COE
- ✓The funding fee replaces PMI and can be rolled into the loan
- ✓The VA benefit is reusable — it is not a one-time program
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