How It Works
VA loans are mortgage loans guaranteed by the U.S. Department of Veterans Affairs. Available exclusively to eligible veterans, active-duty service members, and surviving spouses, VA loans offer some of the best terms in the mortgage industry: zero down payment, no private mortgage insurance, and competitive interest rates that are often lower than conventional loans.
The VA does not directly lend money - instead, it guarantees a portion of the loan to private lenders, reducing their risk and allowing them to offer favorable terms. While the VA does not set a minimum credit score requirement, most lenders will have their own minimums, typically around 620. The VA does charge a funding fee that ranges from 1.25% to 3.3% of the loan amount, depending on the down payment and whether it is the borrower's first VA loan. This fee can be rolled into the loan.
One of the most powerful features of VA loans is that there is no loan limit for eligible borrowers with full entitlement. This means qualifying veterans can finance high-value homes without needing a jumbo loan or a down payment. VA loans also have a streamline refinance option called the Interest Rate Reduction Refinance Loan (IRRRL), which allows existing VA loan holders to refinance with minimal documentation.
Who Is This For?
- Active-duty military service members
- Veterans with honorable or other-than-dishonorable discharge
- National Guard and Reserve members with qualifying service
- Surviving spouses of veterans who died in service or from service-connected disability
- Military families looking for the most affordable path to homeownership