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VA Loans

Administered by:

U.S. Department of Veterans Affairs

· Federal · Government-Guaranteed Mortgage

Funding status: Active

About the VA Loans

The VA Loan program, administered by the U.S. Department of Veterans Affairs, is a government-guaranteed mortgage benefit that allows eligible veterans, active-duty service members, and qualifying surviving spouses to purchase a home with zero down payment. The VA does not lend money directly. Instead, it guarantees a portion of the loan issued by private lenders, which eliminates the need for a down payment and removes the requirement for private mortgage insurance (PMI). There is no VA-imposed loan limit for borrowers with full entitlement, meaning qualified veterans can finance homes at any price point with nothing down as long as they meet the lender's income and credit requirements.

To qualify for a VA loan, applicants must meet specific military service requirements. Veterans need 90 consecutive days of active duty during wartime or 181 days during peacetime. National Guard and Reserve members qualify after six or more creditable years of service or 90 days of active duty under federal orders. Surviving spouses of veterans who died in service or from a service-connected disability may also be eligible. While the VA itself does not set a minimum credit score, most private lenders require a score of 620 or higher. There are no income limits and no first-time buyer requirement, and the benefit can be used multiple times as long as entitlement is available.

What makes the VA loan stand out compared to FHA, conventional, and USDA financing is the combination of zero down payment and no monthly mortgage insurance. FHA loans require 3.5% down and charge both upfront and annual mortgage insurance premiums. Conventional loans with less than 20% down require PMI until sufficient equity is built. The VA loan trades these costs for a one-time VA Funding Fee, which ranges from 1.25% to 3.3% of the loan amount depending on down payment and whether it is a first or subsequent use. Veterans with a service-connected disability rating of 10% or higher are fully exempt from the funding fee.

How much assistance

No loan limit for veterans with full entitlement (0% down at any price); partial entitlement subject to conforming limits ($832,750 standard in 2026)

Eligibility

First-time buyer required: No
Geographic restrictions: Available nationwide; primary residence only
Homebuyer education required: No

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How to Apply for VA Loans

Step 1: Confirm your service eligibility

You must meet minimum service requirements to use a VA loan. Veterans need 90 consecutive days of active duty during wartime or 181 days during peacetime. National Guard and Reserve members need six or more creditable years of service or 90 days of active duty under federal orders. Surviving spouses of veterans who died in service or from a service-connected disability may qualify. Check your eligibility status at va.gov/housing-assistance/home-loans/eligibility/.

Step 2: Obtain your Certificate of Eligibility (COE)

Your COE confirms your entitlement and tells your lender how much of your benefit is available. The fastest way is to have your lender pull it electronically through the VA's Web LGY portal, which typically takes minutes. You can also request it yourself online at va.gov or through the VA Health and Benefits mobile app. If you need to submit by mail, use VA Form 26-1880 with your DD-214 or statement of service. Mail processing takes 4 to 6 weeks.

Step 3: Find a VA-approved lender and get pre-approved

Not all lenders offer VA loans, and rates and fees vary between VA lenders. Shop at least two or three lenders for rate quotes. Provide your last two years of tax returns, last 30 days of pay stubs, last two months of bank statements, your DD-214, and your COE. The lender will verify your income, credit, and debt-to-income ratio (generally 41% or less for VA loans).

Step 4: Find a home and make an offer

VA loans can be used to purchase single-family homes, condos (if the project is VA-approved), and multi-unit properties up to four units if you live in one. Manufactured homes on permanent foundations also qualify. The property must be your primary residence, and you must move in within 60 days of closing.

Step 5: Complete the VA appraisal and underwriting

The VA requires its own appraisal to confirm the home meets Minimum Property Requirements (MPRs) and that the purchase price does not exceed the appraised value. Your lender orders the appraisal through the VA's portal. The VA appraisal typically costs $500 to $800 depending on your location. Once underwriting is complete and all conditions are cleared, you receive final loan approval.

Step 6: Close on your home

At closing, you sign your mortgage documents and pay any closing costs not covered by the seller, lender credits, or DPA programs. The VA Funding Fee (2.15% for first use with zero down) can be rolled into the loan balance. Veterans with a disability rating of 10% or higher are exempt from the funding fee entirely. There is no prepayment penalty on VA loans.

Real Cost Example

On a $420,000 home in Charlotte, North Carolina, an FHA loan would require a 3.5% down payment of $14,700, plus an upfront mortgage insurance premium of 1.75% ($7,350). A VA loan eliminates both the down payment and the mortgage insurance entirely, saving the buyer $14,700 in upfront cash and removing the ongoing monthly mortgage insurance premium that FHA borrowers pay for the life of the loan.

The VA Funding Fee on a $420,000 purchase with zero down and first-time use is 2.15%, which comes to $9,030. This fee can be rolled into the loan balance rather than paid out of pocket. After accounting for estimated closing costs of $8,500 to $12,500 in Charlotte, a VA buyer may need roughly $8,500 to $12,500 to close, compared to $30,550 to $34,550 for an FHA buyer paying closing costs plus down payment plus the upfront mortgage insurance premium.

Veterans with a service-connected disability rating of 10% or higher pay no funding fee at all, reducing their out-of-pocket costs to just closing costs. Pairing the VA loan with the NC 1st Home Advantage Down Payment program ($15,000 forgivable loan) can cover most or all closing costs, potentially bringing the total cash needed at closing to near zero.

Combining With Other Programs

VA loans can be combined with most state and local down payment assistance programs, and the VA does not restrict the use of additional assistance alongside its guarantee. In North Carolina, eligible veterans can pair a VA loan with the NC 1st Home Advantage Down Payment program, which provides $15,000 as a forgivable loan. Since the VA loan already covers 100% of the purchase price, the $15,000 goes entirely toward closing costs and prepaid expenses, which can be enough to cover most or all out-of-pocket costs on a median-priced home.

VA loans can also be paired with the NC Home Advantage Mortgage, which provides up to 3% of the loan amount as a deferred second mortgage for closing costs and prepaid expenses. The NC Community Partners Loan Pool (up to $50,000 deferred loan) is another option for qualifying buyers. However, some state programs require the use of a specific first mortgage product (such as an NCHFA first mortgage), which may not be compatible with VA financing.

For the strongest combination, pair a VA loan with the NC 1st Home Advantage Down Payment program for a potential zero-cash closing on homes up to the median price range. Confirm with your lender that the specific DPA program you want can be layered on top of VA financing, as compatibility varies by program.

Pros and Cons

The VA loan's greatest advantage is the combination of zero down payment and no private mortgage insurance, which no other mainstream mortgage product offers. An FHA buyer on a $420,000 home in Charlotte pays $14,700 in down payment plus ongoing monthly mortgage insurance premiums for the life of the loan. A conventional buyer with less than 20% down pays PMI until they reach 20% equity. VA borrowers avoid both. The benefit is also reusable, has no income limits, and does not require the borrower to be a first-time homebuyer, making it one of the most flexible mortgage products available.

The primary cost is the VA Funding Fee, which at 2.15% on a first-use purchase with zero down adds $9,030 to the loan balance on a $420,000 home. Subsequent use jumps to 3.3%. Veterans with a service-connected disability are exempt, but everyone else should factor this fee into their total cost comparison against conventional financing. The VA appraisal process can also be stricter than conventional appraisals, requiring the home to meet Minimum Property Requirements that may result in repairs before closing. Buyers interested in fixer-uppers or older properties should be aware that VA appraisals may flag conditions that other loan types would not.

Frequently Asked Questions

Do I have to pay a down payment with a VA loan?+

No. VA loans offer 100% financing with zero down payment for eligible veterans with full entitlement. There is no loan limit for borrowers with full entitlement, meaning you can buy a home at any price point without a down payment as long as you qualify with the lender. Borrowers with partial entitlement (those who still have a prior VA loan outstanding) may need a down payment above the county conforming loan limit of $832,750 in 2026.

What is the VA Funding Fee and can I avoid it?+

The VA Funding Fee is a one-time charge that helps fund the VA loan program. For first-time VA loan users with zero down payment, the fee is 2.15% of the loan amount. Subsequent use is 3.3% with zero down. Putting 5% or more down reduces the fee to 1.5%, and 10% or more drops it to 1.25%. Veterans with a service-connected disability rating of 10% or higher, Purple Heart recipients on active duty, and qualifying surviving spouses are fully exempt from the funding fee.

Can I use a VA loan with down payment assistance programs?+

Yes. The VA does not restrict borrowers from using state or local down payment assistance programs alongside their VA loan. Since VA loans already cover 100% of the purchase price, the DPA funds go toward closing costs and prepaid expenses. In North Carolina, for example, the NC 1st Home Advantage Down Payment program provides $15,000 as a forgivable loan that can cover most closing costs when paired with a VA loan.

Is the VA loan a one-time benefit?+

No. The VA loan benefit can be used multiple times. Once you pay off a VA loan or sell the property, your entitlement is restored and you can use it again. You can even have two VA loans at the same time if you have enough remaining entitlement. The funding fee increases from 2.15% to 3.3% on subsequent uses with zero down payment, but disabled veterans remain exempt regardless of how many times they use the benefit.

What credit score do I need for a VA loan?+

The VA itself does not set a minimum credit score requirement. However, private lenders who originate VA loans typically require a credit score of 620 or higher. Some lenders accept scores as low as 580, but options and rates are more limited at lower scores. There is also no income limit for VA loans, which sets them apart from many state DPA programs that cap eligibility based on household income.

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