VA Loan Guide: Eligibility, Best Lenders and How to Apply
The VA home loan benefit is one of the most useful perks of being a military service member or veteran. It opens the door to VA loan programs that make it a lot easier to finance a home and get a great mortgage rate and loan terms. The VA loan process is a lot like getting a traditional mortgage, but there are key differences you’ll need to understand before deciding whether a VA loan is right for you.
What is a VA loan?
A VA loan is a special type of mortgage created specifically to help veterans become homeowners. VA home loans have more lenient requirements than conventional loans.
Backed by the U.S. Department of Veterans Affairs (VA), VA loans are only available to qualified borrowers as a part of their military benefits. This generally includes active-duty service members and veterans, though spouses can qualify in some cases.
The VA requires you to live in any home you finance with a VA loan.
Key takeaways about VA loans
- Affordable loans with no down payment, no minimum credit score requirement and no mortgage insurance.
- Typically offer lower interest rates and closing costs.
- Come with some unique fees and costs, including the VA funding fee and a VA home appraisal.
Types of VA loans
There are many types of VA loans available, giving borrowers different options to buy a home. Learn more about each one here.
Purchase loans
With a VA purchase loan you can enjoy:
- No down payment
- No credit score minimum
- No income limits
- No loan limits (as long as the borrower has full entitlement)
Jumbo loans
With a VA jumbo loan you can borrow more than the current conforming loan limits allow. The current loan limit for a single-family home is $766,550 in most parts of the U.S.
Refinance loans
With a VA refinance, you can:
- Replace an existing mortgage with a VA loan that has a lower rate
- Borrow up to 100% of your home’s value
Cash-out refinance loans
With a VA cash-out refinance, you can:
- Trade out your current home loan for a new VA loan and pocket some cash at the same time
- Tap home equity up to 90% of your home’s value
VA interest rate reduction refinance loans (IRRRLs)
A VA IRRRL can provide the following benefits to homeowners with a current VA loan:
- A reduction of your current interest rate
- The ability to roll VA closing costs into your loan
- The option to skip a home appraisal
- The ability to bypass income verification
Renovation loans
VA renovation loans may allow you to:
- Purchase or refinance a fixer-upper home and roll remodeling and repair costs into the loan
- Finance up to 100% of the home’s value
Energy-efficient loans (EEMs)
A VA energy-efficient loan may allow you to:
- Add the cost of energy-saving home improvements to your VA loan
- Finance up to 100% of the home’s value
VA manufactured home loans
VA manufactured home loans may allow you to:
- Finance just a manufactured home and place it on land you already own
- Finance a manufactured home and land at the same time
- Refinance a manufactured home you already own and purchase a plot of land to place it on
- Finance the improvements necessary to meet VA manufactured home foundation requirements
VA land loans
A VA land loan can give you the opportunity to:
- Buy land, then build a home on it — all with one mortgage
- Refinance land you’ve already purchased and a home you’ve already built
- Buy farmland, as long as it also has a house on it
Construction loans
A VA construction loan can let you:
- Build a house with no down payment
- Choose from one-time or two-time close options
Supplemental home improvement loans
VA home improvement loans allow you to:
- Finance smaller home maintenance projects and add the loan amount to your current loan
- Finance home maintenance projects and take the cost out as a separate loan
Current VA mortgage rates
VA loan rates are generally lower than FHA loan rates and rates offered on conventional loans. However, since VA loans require a funding fee that conventional and FHA loans don’t, it’s a good idea to compare both APRs and interest rates when deciding between these loan types.
How does a VA loan work?
You can get a VA loan from traditional lenders, like banks and credit unions. The VA doesn’t issue VA loans — instead, it “backs” them, which means the agency pays lenders a certain amount of money if the loan goes into default. This reduces the risk lenders have to take on and allows them to give loans to borrowers who may not be able to qualify for a conventional loan.
Getting a VA loan is very similar to getting any other home loan: You have to apply and provide documentation of your income, assets and employment. Your lender will also review your credit history, credit score and income before approving you for a specific loan amount.
However, there are some big differences between VA loans and the loans available to the average civilian, like conventional loans and FHA loans backed by the Federal Housing Administration (FHA).
Unique VA loan benefits include:
No down payment
Most VA borrowers won’t be required to make a down payment if they don’t want to. Sometimes, though, it makes good financial sense to put money down — it can reduce your VA funding fee (more on that below), and you’ll end up with a smaller loan amount. The smaller the loan, the less you’ll pay in interest and the faster you’ll build equity.
Learn more about how to decide if you should make a down payment on your VA loan.No mortgage insurance
Most low- or no-down-payment loan programs available to civilians require you to pay for mortgage insurance, which covers lenders in case you default on your payments. The VA doesn’t require mortgage insurance on any of its loan types.
Closing costs capped at 1%
VA lenders can only charge 1% of your loan to cover their fees, making VA loan closing costs more affordable than other loan programs. Neither FHA loans nor conventional loans have similar caps on origination or lender fees. Many lenders (those who work with veterans and civilians alike) charge around 1% on just their origination fee, but may also charge application, underwriting or processing fees.
Special benefits for disabled veterans
Veterans with qualifying disabilities get some additional perks when they use their VA loan benefit:
→ VA funding fee exemption
→ Property tax exemptions (check with your county tax assessor for more information)
→ Eligibility for various disability housing grant programs, including:
- Specially Adapted Housing (SAH) or Special Home Adaptation (SHA) grants, which offer up to $117,014 and $23,444, respectively, to help disabled veterans buy a house or improve one they already own to make it more accessible.
- Temporary Residence Assistance (TRA) grants, which provide up to $47,130 to veterans to make accessibility alterations to a home owned by a family member.
- Home Improvements and Structural Alterations (HISA) grants, which provide up to $2,000 for veterans who don’t have service-connected disabilities and up to $6,800 for veterans with service-connected disabilities.
Unique VA loan closing costs and fees include:
VA funding fee
The VA funding fee helps offset the cost of the VA loan program to taxpayers. It costs 1.25% to 3.30% of the loan amount and is typically rolled into the total loan amount, even if you make no down payment. Disabled veterans are exempt from having to pay the funding fee.
Higher VA home appraisal costs
An appraisal for a VA loan is usually more expensive than other home appraisals. Only VA-approved appraisers can complete one, and they’ll typically cost $500 to $1,200 — much more than the $300 to $500 usually spent on a conventional appraisal. In addition to establishing a fair property value, a VA appraisal ensures that the home meets special VA standards, known as “minimum property requirements” (we’ll describe these requirements in more detail later).
The best VA loan lenders
To find the best VA lender for you, gather loan estimates from at least three to five lenders and compare the terms they’re offering. Shopping around can save you thousands of dollars over the long haul, according to LendingTree data.
Below, we list our picks for the best VA lenders. They offer best-in-class service to veterans and service members looking to achieve homeownership.
Summary: The best VA mortgage lenders
Lender | User ratings | LendingTree rating | Min. credit score (VA loan) | Min. down payment | ||
|---|---|---|---|---|---|---|
 |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | 580 | 0% with full entitlement | 0.42% | ||
 |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | 620 | 0% with full entitlement | 0.34% | ||
 | User reviews coming soon | Not disclosed | 0% with full entitlement | 0.74% | ||
 |
User Ratings & Reviews
Ratings and reviews are from real consumers who have used the lending partner’s services. | 500 | 0% with full entitlement | 1.06% |
Best overall VA lender: Rocket Mortgage
Rocket Mortgage at a glance
- Minimum credit score (VA loans): 580
- Average rate spread Rate spread is the difference between the average prime offer rate (APOR) — the lowest APR a bank is likely to offer any private customer — and the average annual percentage rate (APR) this lender offered to mortgage customers in 2022. The higher the number, the more expensive the loan. (all loan types): 0.42%, which is reasonably competitive when compared with other large mortgage lenders.
- Average LTV ratio (all loan types): 70%
- Available VA loan programs: Purchase, streamline refinance (IRRRL), cash-out refinance
- Additional loan products: Conventional, FHA, jumbo, home equity loans
- LendingTree rating:
Why we chose Rocket Mortgage
Rocket Mortgage is one of the largest mortgage lenders in the game. It offers all of the essential VA programs: purchase, cash-out refinance and streamline refinance, also known as an interest rate reduction refinance loan (IRRRL). On top of that, military borrowers looking for a robust online loan experience will find that Rocket Mortgage offers an online application, rate information that’s updated regularly, detailed loan product information and resources to help you navigate the complex world of mortgage lending.
Read our Rocket Mortgage review.
Best lender for VA loan rate transparency: Veterans United
Veterans United at a glance
- Minimum credit score (VA loans): 620
- Average rate spread Rate spread is the difference between the average prime offer rate (APOR) — the lowest APR a bank is likely to offer any private customer — and the average annual percentage rate (APR) this lender offered to mortgage customers in 2022. The higher the number, the more expensive the loan. (all loan types): 0.34%, which is near the middle of the pack when compared with other large mortgage lenders.
- Average LTV ratio (all loan types): 81%
- Available VA loan programs: Purchase, streamline refinance (IRRRL), cash-out refinance
- Additional loan products: Conventional, FHA, jumbo
- LendingTree rating:
Why we chose Veterans United
Veterans United specializes in mortgage lending tailored to the needs of military borrowers. And while the company offers conventional loans and other products that don’t require military service, more than 90% of its customers come specifically for a VA loan. The lender makes a variety of VA loan rate information available online and allows mortgage shoppers to tailor that information to their credit score. Veterans United’s attention to the details and needs of military borrowers also shines through in its rate information, which is updated daily and includes the VA funding fee.
Read our Veterans United review.
Best VA loan lender for online experience: Flagstar Bank
Flagstar Bank at a glance
- Minimum credit score (VA loans): Not disclosed
- Average rate spread Rate spread is the difference between the average prime offer rate (APOR) — the lowest APR a bank is likely to offer any private customer — and the average annual percentage rate (APR) this lender offered to mortgage customers in 2022. The higher the number, the more expensive the loan. (all loan types): 0.74%, which is on the higher end when compared with other large mortgage lenders.
- Average LTV ratio (all loan types): 73%
- Available VA loan programs: Purchase, streamline refinance (IRRRL)
- Additional loan products: Conventional, FHA, jumbo, HELOC
- LendingTree rating:
Why we chose Flagstar Bank
With nationwide reach, Flagstar issues home loans in all 50 states, offering both VA purchase loans and VA streamline refinances (IRRRLs). But the company really shines with its online experience: Flagstar publishes rates online, offers helpful product information and resources about mortgage lending on its website and has a convenient online application. And if you think a stellar online experience can only be had with an online bank, you may be pleasantly surprised to learn that Flagstar operates brick-and-mortar branches in several states.
Read our Flagstar Bank review.
Best lender for VA loans with bad credit: Carrington Mortgage Services
Carrington Mortgage Services at a glance
- Minimum credit score (VA loans): 500
- Average rate spread Rate spread is the difference between the average prime offer rate (APOR) — the lowest APR a bank is likely to offer any private customer — and the average annual percentage rate (APR) this lender offered to mortgage customers in 2022. The higher the number, the more expensive the loan. (all loan types): 1.06%, which is high when compared with other large mortgage lenders, but likely reflects that Carrington specializes in helping underserved borrowers, who may have high credit scores or low down payments.
- Average LTV ratio (all loan types): 71%
- Available VA loan programs: Purchase, refinance, streamline refinance (IRRRL)
- Additional loan products: Conventional, FHA, jumbo, USDA
- LendingTree rating:
Why we chose Carrington Mortgage Services
The VA doesn’t set a credit score minimum for the loans it backs, but if you’re looking for a VA loan and have a low credit score, you’ve undoubtedly discovered that lenders often have a minimum. Carrington’s minimum credit score is set at 500, which is a whopping 218 points below the average for VA loans. No other VA lenders we reviewed are willing to lend to a borrower with a credit score lower than 580.
Read our Carrington Mortgage review.
VA loan eligibility and requirements
Not everyone who served in the military automatically qualifies for a VA loan. Specific VA loan requirements and eligibility criteria must be met, which we have summarized below.
VA loan eligibility
Here’s what you’ll need to verify that you’re eligible:
- A minimum amount of service. The exact requirement is based on what type of service member you are or were.
- A certificate of eligibility (COE). This form, issued by the VA, proves that your VA loan benefits qualify you for a loan. You can request one online.
What if my COE says I have '$0' of entitlement?
If your COE says that you have “$0” of basic entitlement left, don’t panic. You may still qualify for another VA loan by using your “bonus” entitlement. If you need help determining where your VA benefits stand, ask your lender or contact your local VA regional loan center.
VA loan requirements
These are the top five most important VA requirements you’ll need to meet:
- Have a steady employment history
Lenders prefer a consistent, two-year job history, but may make exceptions at their discretion. - Have a credit score above 500
VA guidelines don’t require a minimum credit score, but many lenders set their minimums at 620. However, you may find lenders — like Rocket Mortgage and Carrington Mortgage Services — who will accept scores between 500 and 619 without too much trouble. - Keep your DTI ratio below 41%
Your debt-to-income (DTI) ratio measures your total monthly debt, including your new mortgage payment, divided by your gross (pretax) income. - Stay within VA loan limits
There are no loan limits for borrowers with full VA entitlement — however, if you’ve used your VA loan benefits before, you may be working with partial entitlement. For those with partial entitlement, the VA loan limit matches the current conforming loan limit. - Meet the property requirements
Any home financed with a VA loan must be “safe, sound and sanitary,” according to VA property guidelines.
Pros and cons of VA loans
| Pros | Cons |
|---|---|
No down payment: Making a down payment is optional, not required. No loan limits for most borrowers: Those with full entitlement have no loan limit. No income restrictions: Rich or poor, your income won’t bar you from using a VA loan. No mortgage insurance: Mortgage insurance that protects your lender in case of loan default isn’t required. Capped fees: Lenders can’t charge you more than 1% of the loan amount. Extra benefits for those with disabilities: Borrowers with qualifying disabilities get extra help with fees and grants (see below). | Military service required: Eligibility is based on your military service history. VA funding fee: This fee can be up to 3.6% of the loan amount. Tougher appraisal requirements: The complex VA requirements must be applied by a VA-approved appraiser. Costly appraisals: VA appraisals are more expensive than those of conventional or FHA loans. Loan limits: A borrower with partial entitlement will have a loan limit. Primary residences only: VA loans can’t be used to finance a second home or investment property. |
How to get a VA loan
You’ll normally follow these five steps to apply for a VA home loan:
STEP 1: Shop for a lender
You might need customer service tailored to someone deployed overseas, or simply want the most competitive interest rate offer — either way, find a lender that caters to your needs.
STEP 2: Gather documents
To get a VA mortgage preapproval you’ll typically need:
- Certificate of eligibility
- DD214 (discharge or record of separation paperwork)
- Leave and earning statement (if you’re on active duty)
- Child care statement
- Nearest living relative statement
- Two years of W-2s
- 60 days of bank statements
- Letters of explanation for credit issues, gaps in employment or large deposits in your asset accounts
The VA caps lender fees at 1% of your loan amount, so avoid VA lenders that quote costs any higher than that.
STEP 3: Find your home and get it appraisedYour lender will need to order your appraisal from a VA-approved inspector. Check the appraisal for any repair requirements and be prepared to negotiate with the seller if anything needs to be fixed.
STEP 4: Review your closing disclosureThe lender will issue your closing disclosure at least three business days before your closing date. That’s a great time to make sure you aren’t being charged a funding fee if you meet the requirements for an exemption.
STEP 5: Transfer funds and sign your documentsYou’ll typically need to attend your closing in person at a title company, escrow office or attorney’s office. Once your loan funds are wired, the property title is recorded into your name and you’re officially a homeowner!
Is a VA loan right for you?
Before you commit to any loan, it’s important to weigh the pros and cons of the exact loan you’re being offered. For a VA loan, you should evaluate whether:
→ It’ll help you meet your financial goals
→ You can find a lower interest rate elsewhere
→ The true cost of borrowing — also known as the loan’s annual percentage rate (APR) — is competitive
→ The monthly PITI payments will fit in your budget comfortably
Frequently asked questions
Yes, VA loans are assumable. Just be sure you’ve done your due diligence and know the pros and cons of assuming a VA mortgage.
No, the VA doesn’t require private mortgage insurance (PMI). Instead of the borrower paying for insurance to cover a lender’s potential losses, the VA offers a guaranty that covers the cost of lender losses (equaling up to 25% of your loan amount) if you default. The VA also charges you a funding fee worth 1.4% to 3.6% of your loan amount to offset the program cost to taxpayers.
You can use your VA loan benefit as often as you wish, as long as you have sufficient entitlement to buy a home and are purchasing a primary residence. Your VA loan entitlement is a lifetime benefit.
You’ll usually pay 2% to 6% in VA loan closing costs depending on your loan size. However, VA-approved lenders can’t charge more than 1% of your loan amount in lender fees.
Eligible veterans typically don’t need any down payment. However, you may need one if you have an outstanding VA loan on another home and don’t have enough entitlement to cover the guaranty on the new loan. If you’re not sure where you stand, request a COE or check with your loan officer.
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