VA Loans Explained: Eligibility, Benefits, and How They Work
Last updated September 2026
Quick answer
A VA loan lets eligible veterans, active-duty service members, and certain surviving spouses buy a home with no down payment and no PMI — ever, regardless of how much equity you have. In exchange, most borrowers pay a one-time VA funding fee (0.5%–3.3% of the loan, usually financed in). On a $400,000 home with $0 down, a first-time VA borrower pays about $2,516/month — no mortgage insurance line item at all, at any down payment level.
Who's eligible
- Veterans who meet minimum active-duty service length requirements
- Active-duty service members, typically after 90 continuous days of service during wartime (181 days peacetime)
- National Guard and Reserve members, generally after 6 years of service, or if activated to federal duty
- Certain surviving spouses of service members who died in service or from a service-connected disability
Eligibility is confirmed with a Certificate of Eligibility (COE), which your lender can usually pull directly.
The example we'll use throughout
Same $400,000 home, same 6.25% rate. The funding fee — not PMI — is what changes the math:
| Scenario | Down payment | Funding fee | Loan amount | Monthly P&I |
|---|---|---|---|---|
| First-time use, $0 down | $0 | 2.15% ($8,600) | $408,600 | $2,516 |
| First-time use, 5% down | $20,000 | 1.50% ($5,700) | $385,700 | $2,375 |
| First-time use, 10% down | $40,000 | 1.25% ($4,500) | $364,500 | $2,244 |
| Subsequent use, $0 down | $0 | 3.30% ($13,200) | $413,200 | $2,544 |
| Disability-exempt, $0 down | $0 | 0% ($0) | $400,000 | $2,463 |
No scenario above includes a mortgage insurance payment — that's the structural difference from FHA and conventional loans. If you're a repeat VA borrower, notice the sharpest lever isn't avoiding the fee entirely — it's the down payment: putting just 5% down on a subsequent-use loan drops your fee from 3.30% to 1.50%, the same rate a first-time buyer gets.
Who's exempt from the funding fee
Veterans receiving VA disability compensation at any rating (10%+), Purple Heart recipients on active duty, and certain surviving spouses receiving Dependency and Indemnity Compensation (DIC) pay no funding fee at all — the $0-down, $0-fee row above. On our $400,000 example, that's roughly $8,600 saved at closing compared to a non-exempt first-time buyer.
How VA loan limits actually work
For veterans with full entitlement (the most common case), there is no VA loan limit — $0 down is available on any loan size a lender will approve, based on your income and credit. The limit only applies if you have an active VA loan already or have defaulted on one (partial entitlement) — in that case, no-money-down financing is capped at your county's conforming loan limit: $832,750 in most U.S. counties for 2026, up to $1,249,125 in high-cost areas.
Things to consider
- Primary residence only. Like FHA, VA loans can't be used for investment properties or vacation homes.
- No minimum credit score from the VA itself — but individual lenders typically want 580–620, and some go lower with compensating factors.
- VA appraisals check for minimum property requirements (safety, soundness, sanitation) similar to FHA — can complicate financing a home needing significant repairs.
- VA loans are assumable by a qualified buyer — a real advantage if you sell in a higher-rate environment later.
- Financing the funding fee raises your loan balance and lifetime interest — paying some or all of it in cash at closing, if you can, reduces both.
- The funding fee may be tax-deductible as mortgage insurance, subject to current-year IRS rules and your income — confirm with a tax professional.
Run your own numbers
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Frequently asked questions
Do I have to pay the VA funding fee if I'm disabled?
No. Veterans receiving VA disability compensation at any rating are exempt from the funding fee entirely, regardless of down payment or how many times they've used the benefit.
Can I use a VA loan more than once?
Yes. The funding fee is higher on subsequent uses with a small or no down payment (3.30% vs. 2.15% at $0 down), but putting down 5% or more brings repeat borrowers back to the same 1.50% rate first-time buyers get.
Is there a maximum VA loan amount?
Not for veterans with full entitlement — $0 down is available regardless of loan size, subject to your lender's income and credit approval. Borrowers with an existing VA loan (partial entitlement) are capped at their county's conforming loan limit for no-money-down financing.
Do VA loans have a minimum credit score?
The VA doesn't set one, but most lenders require roughly 580–620.
Can I use a VA loan for a second home or rental property?
No. VA loans require the home to be your primary residence.
Related guides
What Is PMI (Private Mortgage Insurance)?
What PMI costs by down payment size, how it's calculated, and the two ways it legally comes off your loan.
Read moreFHA vs. Conventional Loan: Which Is Right for You?
Five ways to finance the same home compared — and why your credit score, not the headline rate, usually decides which loan wins.
Read moreHow Much House Can I Afford?
The 28/36 rule applied to a real budget — and why $500 of monthly debt costs $70,000 of buying power.
Read moreMortgage Closing Costs Explained: What to Expect
A full line-item breakdown of $12,000 in closing costs, who pays what, and four ways to reduce the total.
Read moreFigures on this page are generated from the same amortization engine that powers the MortMetrix dashboard, using the example loan stated in each table. They are estimates based on a fixed-rate loan at a constant rate and are not your actual loan terms. This is educational information, not financial advice.