By the CalcLedger editorial team · Updated September 2026 · Examples use illustrative rates · How we calculate
For eligible service members, veterans, and some surviving spouses, a VA loan is often the best mortgage available. It's backed by the U.S. Department of Veterans Affairs, which lets private lenders offer terms that are hard to match: no down payment required, no monthly mortgage insurance, and rates that are usually competitive with or lower than conventional loans.
Who qualifies
Eligibility is based on service. In general, you may qualify if you are:
- An active-duty service member who has served at least 90 continuous days.
- A veteran who meets minimum service requirements, which depend on when you served, and was not dishonorably discharged.
- A member of the National Guard or Reserves who meets service requirements, including certain periods of active duty.
- The surviving spouse of a service member who died in service or from a service-connected disability, in many cases.
You prove eligibility with a Certificate of Eligibility (COE). Most lenders can request it for you online in minutes.
Beyond eligibility, you still need to qualify with a lender. The VA doesn't set a minimum credit score, but most lenders look for around 620. Lenders also look at your debt-to-income ratio and at residual income, the money left over each month after major expenses, which is a VA-specific test.
The VA funding fee
Instead of monthly mortgage insurance, VA loans charge a one-time funding fee. It can be paid at closing or, more commonly, added to the loan. The 2026 rates for purchase loans:
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% to less than 10% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
For refinances, the Interest Rate Reduction Refinance Loan (IRRRL, or "streamline") carries a 0.5% fee, and a cash-out refinance follows the 2.15% / 3.3% rates.
Many borrowers pay no funding fee at all. Veterans who receive VA compensation for a service-connected disability, Purple Heart recipients on active duty, and eligible surviving spouses are among those exempt. Your Certificate of Eligibility shows your status.
What a VA loan costs compared with other loans
On a $350,000 home with no down payment, a first-time VA borrower pays a 2.15% funding fee of about $7,525. Added to the loan, that makes a balance of about $357,525. At an illustrative 6.25% for 30 years, the principal-and-interest payment is about $2,201, with no mortgage insurance on top.
| Loan on a $350,000 home | Down payment | Monthly P&I + mortgage insurance |
|---|---|---|
| VA, first use, 0% down (6.25%) | $0 | ≈ $2,201 |
| FHA, 3.5% down (6.25%) | $12,250 | ≈ $2,271 |
| Conventional, 5% down, fair credit (6.5%) | $17,500 | ≈ $2,351 |
The VA borrower has the lowest payment and needs no down payment. Putting 5% down on the VA loan lowers the funding fee to 1.5% and the payment to about $2,078. Figures for FHA and conventional come from our FHA vs. conventional comparison.
Other VA loan features
- No loan limit for full entitlement. Borrowers with full entitlement can borrow above the conforming limit without a down payment, as long as the lender approves. Borrowers who still have an active VA loan may face limits.
- Limits on closing costs. The VA restricts some fees lenders can charge, and sellers can pay all of your standard closing costs plus up to 4% of the price in additional concessions.
- Reusable. You can use the benefit again after selling, and in some cases have more than one VA loan at a time.
- Assumable. A qualified buyer can take over your VA loan, including its rate, which can be valuable if rates have risen since you bought.
- No prepayment penalty.
Limitations to know
- Primary residence only. VA loans are for a home you'll live in, not for investment properties. A 2- to 4-unit building is allowed if you live in one unit.
- Property requirements. The VA appraisal checks that the home meets minimum property requirements, which can complicate fixer-uppers.
- The funding fee adds to the balance. With no down payment, you start with little or no equity. If prices fall and you need to sell soon, you could owe more than the home is worth.
Using the IRRRL to refinance later
If rates fall after you buy, the VA's Interest Rate Reduction Refinance Loan offers a streamlined path. It usually requires no appraisal and little paperwork, and the funding fee is just 0.5%. The VA requires that the refinance provide a clear benefit, such as a lower rate, and that you can recoup the closing costs within 36 months. Before accepting any offer, check the break-even point with the refinance calculator.
Next steps
- Get your Certificate of Eligibility through a lender or the VA.
- Compare quotes from several lenders experienced with VA loans. Rates and fees vary.
- Check your budget with the home affordability calculator, and see the payment on a specific home, including taxes and insurance, in the mortgage calculator. Add the funding fee to the loan amount if you'll finance it.
Also plan for closing costs, even with no down payment, unless the seller covers them.