What is a VA loan?

A VA loan is a home mortgage guaranteed by the U.S. Department of Veterans Affairs. The VA doesn't lend money directly — it guarantees a portion of the loan, reducing the lender's risk and enabling favorable terms for qualifying borrowers. VA loans are available only to eligible veterans, active-duty service members, National Guard and Reserve members who meet service requirements, and certain surviving spouses. Eligibility is established through a Certificate of Eligibility (COE), which lenders can often obtain directly from the VA.

Key benefits of a VA loan

• No down payment required for most VA loans — borrowers can finance 100% of the purchase price.
• No private mortgage insurance (PMI) — unlike conventional loans with less than 20% down or FHA loans, VA loans don't require ongoing mortgage insurance premiums.
• Competitive interest rates — the VA guarantee lets lenders offer rates that are often at or below market.
• Limited closing costs — the VA sets rules on which fees lenders can charge VA borrowers.
• No prepayment penalty — you can pay off the loan early without a fee.

The VA funding fee

VA loans don't have PMI, but most borrowers pay a one-time VA funding fee at closing (it can be financed into the loan). The fee varies based on down payment size, loan type (purchase vs. refinance), and whether it's your first or subsequent VA loan use. Certain borrowers are exempt from the funding fee — including veterans receiving VA disability compensation and surviving spouses of veterans who died in service or from a service-connected disability. Full fee tables and exemptions are on VA.gov.

How to qualify for a VA loan

Eligibility depends on your service history. Most lenders also require a minimum credit score (often around 620, though the VA itself sets no minimum) and will review your income, employment, and debt-to-income ratio. The home must be your primary residence and meet VA property standards — the VA requires an appraisal by a VA-approved appraiser. You apply through a VA-approved lender, not through the VA directly.

VA loan types

Beyond the standard purchase loan, the VA program includes: the VA Interest Rate Reduction Refinance Loan (IRRRL) for streamline refinancing to a lower rate; the VA cash-out refinance to access equity; and VA construction loans for building a new home. Each has its own eligibility and underwriting requirements.