A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs — available to qualifying active-duty service members, veterans, and surviving spouses. Key benefits: 0% down payment, no PMI, competitive rates.
VA loans offer the strongest single benefit in U.S. mortgage lending: 100% financing (0% down required) without PMI. The VA guarantees a portion of the loan (typically 25%) to the lender, replacing the need for borrower-paid mortgage insurance. Eligibility requires a VA Certificate of Eligibility (COE), available from the VA based on service history. Active-duty: 90 days continuous active duty during wartime, 181 days during peacetime. National Guard / Reserves: 6 years of service. Surviving spouses: spouse of service member who died in service or from service-connected disability. VA loan structure: - 0% down payment (lender may require down payment for certain situations) - No PMI requirement - Funding fee: one-time fee of 1.25-3.3% of loan amount (varies by down payment, first use vs subsequent, military category). Disabled veterans receiving VA disability compensation are exempt. - 2024 VA loan limits removed for first-time use with full entitlement (no cap) - Maximum 41% DTI is the lender's target but exceptions allowed with compensating factors VA loans are typically the cheapest financing available to eligible borrowers. The VA IRRRL (Interest Rate Reduction Refinance Loan) is also a simplified refinance for existing VA borrowers. The U.S. Department of Veterans Affairs VA home loan program is documented at va.gov/housing-assistance/home-loans/ (https://www.va.gov/housing-assistance/home-loans/). COE applications are processed at va.gov/housing-assistance/home-loans/request-coe-form-26-1880/. The CFPB's VA loan guide (https://www.consumerfinance.gov/owning-a-home/loan-options/va-loans/) explains eligibility, the funding fee, and how to compare VA loan offers.
The VA itself sets no minimum credit score. Lenders set their own — typically 580-620 FICO minimum. Veterans United accepts 620+; some VA lenders extend down to 580. Below 580, VA loans get hard to qualify for even though the program allows it.
A one-time fee paid to the VA at closing, financed into the loan rather than paid out of pocket. Typical: 2.15% on first VA loan with 0% down, 1.5% with 5-10% down. Disabled veterans receiving VA disability compensation are exempt.