VA loans offer one of the best home financing options for veterans, active-duty service members, and eligible surviving spouses. These government-backed mortgages come with significant advantages, no down payment, no private mortgage insurance, and competitive interest rates. But how to get a VA loan isn’t always straightforward for first-time applicants.
This guide breaks down the entire process. From eligibility requirements to application steps, readers will learn exactly what it takes to secure a VA loan and move into a new home.
Key Takeaways
- VA loans require no down payment and no private mortgage insurance, saving eligible borrowers tens of thousands of dollars compared to conventional mortgages.
- To get a VA loan, start by obtaining your Certificate of Eligibility (COE) through the VA’s eBenefits portal, a VA-approved lender, or by mail.
- Eligible applicants include veterans, active-duty service members, National Guard and Reserve members, and surviving spouses who meet specific service requirements.
- Shopping around with at least three VA-approved lenders can save thousands of dollars since interest rates vary by 0.5% or more between lenders.
- VA loan benefits can be used multiple times throughout your lifetime after restoring entitlement from previous loans.
- Most VA loans include a funding fee of 1.25% to 3.3%, though veterans with service-connected disabilities are exempt.
What Is a VA Loan and Who Qualifies?
A VA loan is a mortgage program backed by the U.S. Department of Veterans Affairs. Private lenders issue these loans, but the VA guarantees a portion of each loan. This guarantee reduces risk for lenders and allows them to offer better terms to borrowers.
VA loans exist specifically for those who have served the country. Eligible applicants include:
- Active-duty service members with at least 90 consecutive days of service during wartime or 181 days during peacetime
- Veterans who meet the same service requirements and received an honorable discharge
- National Guard and Reserve members with at least six years of service or 90 days of active duty
- Surviving spouses of service members who died in the line of duty or from a service-connected disability
These requirements can vary based on when someone served. For example, Gulf War-era veterans need different service lengths than Vietnam-era veterans.
The VA doesn’t set a minimum credit score, but most lenders require at least 620. Some lenders work with lower scores, so shopping around helps. Income verification and debt-to-income ratios also matter during the approval process.
Steps to Apply for a VA Loan
Getting a VA loan involves several key steps. Following this process correctly saves time and prevents delays.
Obtain Your Certificate of Eligibility
The Certificate of Eligibility (COE) proves to lenders that a borrower qualifies for VA loan benefits. There are three ways to get one:
- Online through the VA’s eBenefits portal – The fastest method for most applicants
- Through a VA-approved lender – Many lenders can pull COEs directly during the application
- By mail using VA Form 26-1880 – Takes longer but works if online options aren’t available
The COE shows remaining entitlement, which determines how much the VA will guarantee. First-time VA loan users typically have full entitlement, while those who’ve used VA loans before may have partial entitlement remaining.
Find a VA-Approved Lender
Not all mortgage lenders offer VA loans. Borrowers need to work with VA-approved lenders who understand the program’s specific requirements.
When comparing lenders, consider:
- Interest rates and APR
- Closing cost estimates
- Lender fees and origination charges
- Customer reviews and response times
Getting quotes from at least three lenders helps borrowers find the best deal. Rates can vary by half a percentage point or more between lenders, which adds up to thousands of dollars over a loan’s lifetime.
Complete the Application and Underwriting Process
Once a borrower selects a lender, the formal application begins. Expect to provide:
- Pay stubs and employment verification
- Tax returns from the past two years
- Bank statements showing assets
- Information about current debts
The lender reviews everything and orders a VA appraisal. This appraisal confirms the property’s value and ensures it meets VA minimum property requirements. Homes must be safe, structurally sound, and sanitary.
Underwriting typically takes two to four weeks. During this time, borrowers should avoid opening new credit accounts or making large purchases. These actions can affect credit scores and debt ratios, potentially jeopardizing approval.
Benefits of Choosing a VA Loan
VA loans offer advantages that conventional mortgages simply can’t match.
No down payment required. Most VA loans allow 100% financing. Conventional loans typically require 5% to 20% down, while FHA loans need at least 3.5%. For a $300,000 home, that’s a savings of $15,000 to $60,000 upfront.
No private mortgage insurance (PMI). Conventional borrowers who put down less than 20% pay PMI, which costs $100 to $300 monthly on average. VA loan borrowers skip this expense entirely.
Competitive interest rates. VA loans consistently offer rates 0.25% to 0.5% lower than conventional mortgages. On a 30-year loan, this difference saves borrowers tens of thousands of dollars.
Easier qualification standards. The VA doesn’t impose a maximum debt-to-income ratio. While lenders set their own limits, VA guidelines allow more flexibility than other loan types.
Limited closing costs. The VA caps certain fees that lenders can charge. Sellers can also pay all of a buyer’s loan-related closing costs plus up to 4% of the loan amount toward other costs.
Lifetime benefit. Veterans can use VA loan benefits multiple times. After paying off or selling a home purchased with a VA loan, borrowers can restore their entitlement and use it again.
Common VA Loan Requirements to Know
Understanding VA loan requirements helps borrowers prepare and avoid surprises.
VA funding fee. Most borrowers pay a one-time funding fee ranging from 1.25% to 3.3% of the loan amount. This fee funds the VA loan program. Veterans with service-connected disabilities and surviving spouses are exempt.
Primary residence only. VA loans finance primary homes only. Borrowers cannot use them for vacation properties or investment real estate. They must occupy the home within 60 days of closing in most cases.
Property standards. The VA appraisal checks more than value. Appraisers look for safety hazards, working systems (heating, electrical, plumbing), and structural integrity. Fixer-uppers that need major repairs may not qualify.
Sufficient income. Borrowers need enough stable income to cover the mortgage payment plus other debts. Lenders calculate residual income, money left over after paying major expenses, to ensure borrowers can afford daily living costs.
Credit history matters. While the VA sets no minimum score, lenders typically want to see responsible credit use. Recent bankruptcies or foreclosures may require waiting periods before VA loan approval.
