VA Home Loan Explained

A VA-backed home loan is a mortgage from an ordinary lender that the VA guarantees. The guarantee is what lets lenders offer terms you wouldn't otherwise get.

Two features do most of the work. Nearly 90% of VA-backed loans are made with no down payment, and there's no private mortgage insurance — which on a conventional loan with a small deposit is a permanent monthly cost.

In place of PMI there's a one-off funding fee, rolled into the loan:

  • First use: 2.15% with less than 5% down, 1.5% at 5% or more, 1.25% at 10% or more.
  • Subsequent use: 3.3% with less than 5% down, then the same 1.5% and 1.25% tiers.

The fee is waived entirely if you're receiving VA compensation for a service-connected disability — or are eligible for it but receiving retirement or active-duty pay instead. On a $300,000 loan that's around $6,450 saved on first use, which makes checking your entitlement worth real money.

Who is eligible?

You need a Certificate of Eligibility, and the service test depends on when you served:

  • Currently serving: at least 90 continuous days.
  • Gulf War era to present (Aug 2, 1990 onward): 24 continuous months, or the full period you were called for with a 90-day minimum.
  • Sept 8, 1980 – Aug 1, 1990: 24 continuous months, or the full period with a 181-day minimum.
  • May 8, 1975 – Sept 7, 1980: 181 continuous days.
  • Vietnam, Korea and WWII eras: 90 total days.

National Guard and Reserve: at least 90 days of non-training active-duty service, or 6 creditable years in the Guard or Selected Reserve.

Surviving spouses can be eligible in their own right, which is often missed.

How do I apply?

  • Check whether the funding fee is waived: If you receive disability compensation, it is. That is often thousands of dollars and it depends on your rating, not your lender.
  • Get your Certificate of Eligibility: Request it through VA.gov, or ask your lender — most can pull it electronically in minutes.
  • Use a lender that knows VA loans: The product is standard, but underwriting familiarity affects how smoothly it goes.
  • Understand what no-down-payment costs you: Borrowing 100% means a larger balance and more interest over the term. It is a cash-flow benefit, not free money.
  • Ask about entitlement if you have used one before: Entitlement can be restored or partially reused, which affects both the fee tier and how much you can borrow.

Common questions

Do you need a down payment for a VA home loan?

Usually not. Nearly 90% of VA-backed loans are made with no down payment, and there is no private mortgage insurance either.

What is the VA loan funding fee?

2.15% on first use with less than 5% down, falling to 1.5% at 5% down and 1.25% at 10%. Subsequent use is 3.3% under 5% down. It is waived if you receive VA disability compensation.

How long do you have to serve for a VA home loan?

90 continuous days if currently serving. For veterans it depends on era, generally 24 continuous months since August 1990, or 90 total days for Vietnam, Korea and WWII service. Guard and Reserve need 90 days of non-training active duty or 6 creditable years.

Can you use a VA home loan more than once?

Yes. Entitlement can be restored or partially reused, though the funding fee is higher on subsequent use unless you are exempt.

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