A VA loan is the best deal in mortgages — and most veterans never use it. If you served, if your spouse served, if you’re still serving: this is the loan built for you. No down payment. No monthly mortgage insurance. No loan limit from the VA itself. The only catch is that some lenders add their own rules on top, and those rules are the reason veterans get talked out of the best loan they qualify for.
What a VA loan actually is
A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs. The VA doesn’t lend you the money — a private lender does, and the VA guarantees a portion of it, which is why the terms are so good. The lender takes less risk, so you get better terms.
| Feature | VA loan |
|---|---|
| Down payment | $0 — no down payment required |
| Monthly mortgage insurance | None |
| Credit score minimum | No VA-set minimum; most lenders want 580+ |
| Loan limit | No VA loan limit (lenders set their own) |
| Occupancy | Primary residence only |
| Funding fee | Yes — see below (waived for disabled veterans) |
| Income limit | None |
The two things that matter most: $0 down and no monthly mortgage insurance. No other loan offers both. FHA needs 3.5% down and charges monthly insurance that never drops off. Conventional needs 3% down and charges PMI until you hit 20% equity. VA needs nothing down and charges no monthly insurance at all.
The funding fee — the one real cost
The VA charges a funding fee. It’s how the program pays for itself. The fee depends on whether it’s your first VA loan and how much you put down:
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% of the loan | 3.30% of the loan |
| 5%–9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
On a $700,000 loan with $0 down, first use, the funding fee is $15,050. Most borrowers roll it into the loan — so the loan becomes $715,050 — rather than paying it in cash at closing.
If you have a service-connected disability rating of 10% or higher, the funding fee is waived entirely. That’s $15,050 you don’t pay. If you’re not sure whether you qualify for the exemption, check with the VA before you apply — it’s the single biggest saving in the program.
What it actually costs per month — $700,000 house, $0 down
Assumptions, stated plainly so you can check me: VA 30-year fixed at 6.84% (national average for VA loans, November 6, 2026). Property tax 1.25% of price per year. Homeowners insurance ~0.5% of value per year. Funding fee $15,050 (2.15% of $700,000, first use) rolled into the loan. No HOA, no other debts. Closing costs are on top of the down payment and are not in these numbers.
| Line item | Monthly |
|---|---|
| Down payment | $0 cash |
| Loan | $715,050 (incl. $15,050 funding fee) |
| Principal & interest (6.84%) | $4,681 |
| Property tax (1.25%) | $729 |
| Homeowners insurance (~0.5%/yr) | $292 |
| Monthly mortgage insurance | $0 |
| Total monthly payment | $5,701 |
Income needed at 36% debt-to-income, no other debts: about $190,000/year. At 43% DTI: about $159,100/year.
Compare: FHA on the same house costs $5,881 a month with $24,500 down and $315 a month in mortgage insurance that never drops off. Conventional at 10% down costs $5,551 a month but needs $70,000 in cash. VA costs $5,701 with zero cash down — and the payment is lower than FHA’s.
The self-employed VA rule nobody tells you
Here’s the niche that costs veterans their VA loan. If you’re self-employed, some lenders apply an extra rule: they want to see that your business has been stable and profitable for two years, and they want a letter from your CPA or tax preparer explaining your business. Some lenders go further and require that your business income be verified in a way that doesn’t match how you actually file.
This is a lender overlay — a rule the lender adds on top of the VA’s rules. The VA doesn’t require it. If one lender turns you down for being self-employed, that’s the lender’s rule, not the VA’s. Talk to another lender — ideally one that does a lot of VA loans and knows the difference between the VA’s guidelines and their own overlays.
Same principle applies to the credit score. The VA sets no minimum. If a lender tells you they need 640, that’s their rule. Another lender may take you at 580.
Who qualifies
You qualify for a VA loan if you meet the service requirements:
- Active duty: 90 consecutive days of active service.
- Veterans: 181 days of active service during peacetime, or 90 days during wartime.
- National Guard and Reserves: 6 years of service, or 90 days of active duty under Title 10 or Title 32 orders.
- Surviving spouses: of a veteran who died in service or from a service-connected disability.
You need a Certificate of Eligibility (COE) — the document that proves to the lender you qualify. Your lender can usually pull it for you in minutes. You’ll also need your DD214 (discharge papers) if you’re a veteran.
More than a purchase loan
A VA loan isn’t just for buying. Two refinances worth knowing:
- IRRRL (Interest Rate Reduction Refinance Loan) — the “VA streamline.” Refinance to a lower rate with minimal paperwork, no appraisal in most cases, and no income verification. It’s the fastest refinance in the business.
- Cash-out refinance — refinance and take cash out, up to 100% of the home’s value in many cases. Useful for debt consolidation or home improvements, but think carefully before turning home equity into cash.
VA vs FHA vs conventional — same $700,000 house
| VA ($0 down) | FHA (3.5% down) | Conventional 10% down | |
|---|---|---|---|
| Cash down | $0 | $24,500 | $70,000 |
| Loan | $715,050 (incl. $15,050 fee) | $687,321 (incl. $11,821 upfront MIP financed) | $630,000 |
| Monthly payment | $5,701 | $5,881 | $5,551 |
| Monthly mortgage insurance | $0 | $315, never drops off | $262, drops off at 80% LTV |
| Rate | 6.84% | 6.94% | 7.18% |
| Salary needed (36% DTI) | $190,000 | $196,000* | $185,000 |
*FHA salary figure uses the 6.94% FHA math at 43% DTI of $164,100/year; at 36% DTI the same payment needs about $196,000/year. All salary figures assume no other debts.
Read the table this way: VA is the cheapest way in and the cheapest to carry — if you earned the benefit. FHA is the fallback if you don’t qualify for VA. Conventional is the play if your credit is strong and you have the cash.
Dat’s take
If you earned the benefit, use the benefit — $0 down and no monthly insurance is the best deal in mortgages, and no lender’s overlay should talk you out of it.
What to do with this
- Get your Certificate of Eligibility — your lender can usually pull it in minutes, or request it at va.gov.
- If you’re self-employed, find a lender who does a lot of VA loans and knows the difference between VA guidelines and overlays.
- Compare against What Is an FHA Loan? and What Is a Conventional Loan? so you know what the alternatives actually cost.
- Then start your pre-approval — I work with veterans regularly and I’ll tell you straight whether VA is your best loan or whether another option wins on your numbers.
Rates verified November 8, 2026: VA rate 6.84%, FHA rate 6.94% (national averages, November 6, 2026); conventional rate 7.18% (Freddie Mac Primary Mortgage Market Survey, week ending November 5, 2026). Funding fee rates are the VA’s published 2026 schedule. Property tax 1.25% and insurance ~0.5%/yr are the site’s standard assumptions — your county and your quote will differ. No HOA or closing costs included. Eligibility rules are from the VA Lenders Handbook. This is education, not a rate quote or a loan approval. Dat Nguyen, Certified Mortgage Advisor, NMLS 1379110, Everyday Lending Group.
First Time Home Buyer Pros Podcast — Episode 10: What Is a VA Loan?