VA loans are among the most powerful mortgage programs available. No down payment. No monthly mortgage insurance. Rates that are typically more competitive than conventional. If you're eligible, this program is almost always worth serious consideration.
But "you earned it" isn't an analysis. The funding fee is real money. VA appraisals have specific requirements. And entitlement works differently than most people understand. Here's the full picture.
Who is eligible for a VA loan?
VA loan eligibility is based on military service. The basic categories:
Active duty service members: Eligible after 90 days of continuous active duty.
Veterans: Eligibility depends on when and how long you served. Generally, veterans who served at least 24 continuous months (or at least 90 days during wartime, or 181 days during peacetime) with an honorable discharge are eligible. Shorter service may qualify under specific conditions.
National Guard and Reserve members: Eligible after 6 years of service in the Selected Reserve or National Guard, OR 90 days of active duty service (including for training under certain conditions). Rules were updated in recent years. Confirm your specific situation.
Surviving spouses: Unremarried surviving spouses of veterans who died in service or from a service-connected disability are eligible.
How to confirm eligibility: Your lender can pull your Certificate of Eligibility (COE) through the VA's automated system in most cases. You can also request it yourself through the VA eBenefits portal.
The funding fee: what it is and what it costs.
VA loans don't require mortgage insurance. Instead, they charge a one-time funding fee to help offset the cost of the VA guarantee program.
The funding fee is a percentage of the loan amount. The exact rate depends on your down payment and whether you've used your VA benefit before:
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| < 5% | 2.15% | 3.30% |
| 5%–9.99% | 1.50% | 1.50% |
| 10%+ | 1.25% | 1.25% |
Funding fee exemption: Veterans with a VA service-connected disability rating of 10% or higher, surviving spouses of veterans who died in service, and Purple Heart recipients on active duty are exempt from the funding fee. If you have a disability rating, even pending, confirm exemption status before closing.
The funding fee can be financed into the loan. You don't need to bring it to closing. But it does increase your loan balance and total interest paid.
The real advantage: no monthly mortgage insurance.
This is where VA loans create the most significant long-term value.
Conventional loans require PMI when LTV is above 80%. FHA requires MIP for the life of the loan. VA loans have neither. Once you're past the funding fee, your monthly payment is principal, interest, taxes, and insurance. Nothing more.
Cost comparison: $500,000 purchase, zero or minimum down:
| VA (0% down) | FHA (3.5% down) | Conventional (5% down) | |
|---|---|---|---|
| Down payment | $0 | $17,500 | $25,000 |
| Upfront MI/fee | $10,750 (financed) | $8,531 (financed) | $0 |
| Loan amount | $510,750 | $490,531 | $475,000 |
| Est. rate | 6.50% | 6.875% | 7.125% |
| Monthly P&I | $3,229 | $3,222 | $3,196 |
| Monthly MI | $0 | $207 | $178 |
| Total monthly | $3,229 | $3,429 | $3,374 |
Rates are illustrative. Actual pricing varies by credit profile, lender, and market conditions.
The VA borrower's monthly payment in this scenario is lower than both FHA and conventional, despite borrowing more money, because there's no mortgage insurance. The funding fee is real, but it's paid once and financed in. The monthly advantage compounds over time.
VA entitlement: using the benefit more than once.
VA entitlement is what the VA will guarantee on your loan. Full entitlement means the VA will back 25% of the loan amount, which is why VA loans don't require a down payment. Lenders are comfortable with that LTV because of the guarantee.
If you've used your VA benefit before and fully paid off and sold the home, your entitlement is typically restored. If you still own the prior VA-financed property, you may have remaining (bonus) entitlement, which can allow you to purchase a second property with VA financing under certain conditions.
The entitlement calculation can get complex. The short version: using VA more than once is possible, but requires verifying your COE and understanding your remaining entitlement before assuming how much you can borrow.
Want to run the numbers? Use our VA Entitlement Calculator to see your remaining entitlement, required down payment, and max zero-down purchase price.
VA appraisals: what's different and why it matters.
VA appraisals are conducted by VA-assigned appraisers and must meet the VA's Minimum Property Requirements (MPRs). These requirements cover safety, structural soundness, and habitability. Properties that need significant work may not pass a VA appraisal.
Practically speaking, this means:
- Properties with deferred maintenance, roof issues, or major systems failures may require repairs before closing
- Some sellers are reluctant to accept VA offers because of this perception, though in practice, VA appraisals fail at roughly the same rate as conventional appraisals for move-in ready properties
- The appraisal also establishes value. If the property appraises below the purchase price, VA buyers can negotiate, ask the seller to reduce the price, or bring the difference in cash
Being aware of this upfront helps you and your real estate agent choose the right properties and set the right expectations.
Find out exactly what VA financing looks like for your situation.
Eligibility, funding fee, monthly payment, and whether VA or conventional makes more sense given your down payment. We'll walk through it all.