Getting a mortgage can feel like it requires you to learn a whole new language. What’s the difference between the interest rate and annual percentage rate (APR)? What are points? What about escrow or underwriting? 

Because it’s all fairly complicated, you might think it’s best to go with the most common option out there: a conventional conforming mortgage. But if you serve or served in the U.S. Armed Forces, you should absolutely explore a different route first.

Mortgages backed by the Department of Veterans Affairs (VA) come with definite perks. With VA loans, you can put 0% down, get a better interest rate, and still avoid mortgage insurance. Plus, while getting the VA involved might sound more complicated, it can actually make it easier to qualify for this kind of mortgage.

The other thing that makes this easier? Knowing the basics of VA loans. With that in mind, let’s go over some frequently asked questions about VA loans.

General VA loan questions

What is a VA home loan?

A VA home loan is any mortgage or refinance that’s backed by the Department of Veterans Affairs. 

The VA offers one kind of home loan directly: the Native American Direct Loan.

Other than that, the VA works with lenders, and you get the VA loan through the lender. The VA’s backing typically covers 25% of your loan amount for the lender. With certainty they’ll get at least that much money back on your mortgage, lenders offer options like lower interest rates and 0% down. 

Who is eligible for a VA loan?

You can usually get a VA loan if you’re a veteran or active-duty service member who’s served enough time. In most cases, that’s 90 days during wartime or 181 days in peacetime.

Surviving spouses might also be eligible for VA loans.

Once you’ve met the requirement, you can get the specific paperwork you need to get a VA loan. That’s called a certificate of eligibility (COE). 

To help you figure out if you can get a COE, we have a guide that goes over VA loan eligibility. 

How do I get a certificate of eligibility (COE)?

You have three options here. You can:

1. Request your COE online.
2. Mail VA Form 26-1880 to your regional loan center (the addresses are on the last page of the form).
3. Have your mortgage lender request it on your behalf.

Typically, you’ll get the best deal on a VA loan if you compare offers from multiple lenders. So it’s generally best to get your COE yourself to make sure you’re eligible, then start shopping for the right VA lender. 

What is VA loan entitlement?

Your entitlement says how much of your mortgage the VA is willing to back. With full entitlement, that’s 25% — enough to unlock the 0% down payment. 

You have full entitlement if:

• You’ve never closed on a VA loan before
• You fully paid off your previous VA loan and sold the house
• You used the one-time entitlement restoration

Otherwise, you have partial entitlement. You can still get a VA loan, but there will be a cap on how much you can borrow with 0% down. 

What are the benefits of a VA loan?

The backing from the VA makes lenders see VA loans as lower-risk mortgages. They’re in the risk management game, so they love that. As a result, a VA loan can come with:

• A 0% down payment
• A lower interest rate
• No mortgage insurance
• No loan limit
• More flexible requirements to get approved for your mortgage

Plus, if you already have a VA loan, the interest rate reduction refinance loan (IRRRL) can let you refinance with limited paperwork and costs. 

Can I use a VA loan more than once?

Definitely. But you might have some limitations. 

Once you use a VA loan, the VA adjusts the amount of entitlement you have — or how much of your mortgage they’ll back. You can restore full entitlement by paying off your previous VA loan in full and selling the house or using the one-time entitlement restoration.

If you have partial entitlement, you can still get a VA loan. But if the VA won’t back the full 25% that lenders typically like to see, you’ll need to put up a down payment. 

VA purchase loan questions (for when you plan to use the VA loan as your mortgage)

Do I need a down payment with a VA loan?

If you have full entitlement, no. If you’re eligible for a VA loan and you’ve never closed on one before, you have full entitlement. With full entitlement, you can get a VA loan with 0% down.

If you’ve had a VA loan before, the answer depends on your remaining entitlement and the price of the house you want to buy. If your partial entitlement won’t cover enough of the house, you’ll need to put some money down. 

Can I use a VA loan to buy a second home or investment property?

No. The VA requires occupancy with its purchase loans. That means you need to live at the property after you buy it.

That said, you can use a VA loan to buy up to a fourplex as long as you’ll live in one of the units. So if you’re looking to make some rental income, a VA-backed mortgage could still do the trick. 

Are there limits to how much I can borrow?

If you have full entitlement, the VA doesn’t put a dollar cap on how much you can borrow. That said, you’re still subject to a ceiling. Both the VA and lenders have rules to make sure you don’t borrow more than you can afford to repay. 

If you have partial entitlement, you are subject to a dollar limit. That depends on how much entitlement you have remaining and the county-based ceiling set by the Federal Housing Finance Administration (FHFA). Our VA loan limit calculator can help you figure out your cap there. 

Do I need a certain credit score to qualify?

Technically, no. The VA hasn’t set any rules about minimum credit scores. Lenders get to make their own rules, though. And they usually like to see a score of 620 or above. 

Can I buy a fixer-upper with a VA loan?

You can, but the house can’t be in unlivable shape. All VA loans are subject to minimum property requirements (MPRs). Mechanical systems need to be safe to operate and it needs to have a continuous supply of safe water, for example.

If you find a house that meets MPRs but could use some love, you can get a VA loan for it. 

VA refinance questions

What is a VA IRRRL (streamline refinance)?

This is the VA’s option to help current VA borrowers use a refinance to realize some kind of financial benefit. 

As its name suggests, you can use the interest rate reduction refinance loan (IRRRL) to refinance into a new VA loan with a lower interest rate. You can also use it to change your loan term (how much time you have to repay) or to move from an adjustable-rate mortgage (ARM) to a fixed-rate one.

The key is that the IRRRL has to yield a net tangible benefit to you. In other words, you have to be able to show that it will save you money.

If you can, you can tap into the streamline refinance to get a new VA loan with less paperwork. IRRRLs usually don’t require a new appraisal or credit underwriting, for example. Plus, VA IRRRLs come with one of the lowest VA funding fees around: just 0.5%. 

Can I get cash out with a VA refinance?

Yes, but not with a streamline refinance. Instead, you’ll need to use the VA’s cash-out refinance. This comes with a higher funding fee (2.15–3.3%), but it lets you liquidate some of the equity you’ve built up in your house. That turns it into cash in your hand.

You can use this option even if your current mortgage isn’t VA-backed. The VA will refinance any kind of mortgage with its cash-out option. 

How do I get a VA refinance?

Just like a purchase loan, you don’t go straight to the VA for a refinance. Instead, you’ll work with a mortgage lender that offers VA-backed refinances.

When you refinance, you don’t change the terms of your existing mortgage. You completely replace your old mortgage with a new one. Some or all of the balance of your new mortgage goes toward paying off your old mortgage in full. 

Because you’re getting an entirely new home loan, you don’t need to stick with the same lender. 

Can I refinance if I’ve already used my VA benefits?

Yes. But you might have some limitations depending on the type of refinance you want to use.

With an IRRRL, the entitlement basically passes from the old mortgage to the new one. You’re not using your entitlement again, you’re just transferring it. So your remaining entitlement doesn’t affect you here.

With a cash-out refinance, it’s a little bit different. If you have full entitlement, you don’t have any limitations. (You have full entitlement if you’ve never had a VA loan [i.e., if you have a different kind of mortgage you want to refi into a VA one].) 

If you have partial entitlement, you’ll have a limit on how much you can borrow without having to put money down. That down payment requirement could eat into the cash you want to pull out of your house. A mortgage lender can help you understand where your borrowing cap is and how it affects the amount of cash you can pocket. 

Will I have to pay closing costs on a VA refinance?

Yes. You’re subject to both the lender’s closing costs and the VA funding fee. 

But with an IRRRL, that all should be relatively affordable. The VA funding fee is only 0.5% of the loan amount. And the streamline refinance eliminates some of the costs that come with other refis, like paying for a new appraisal.

With a cash-out refinance, you’ll pay a VA funding fee of 2.15% if it’s your first time getting a VA loan. If you’ve had a VA mortgage before, your funding fee is 3.3%. And you’ll be subject to all of the other closing costs that typically come with a refinance. 

The VA funding fee

What is the VA funding fee?

The VA funding fee is what you pay into the overall pot that keeps the VA’s loan program running. The amount you pay is a percentage of the total amount you’re borrowing. 

If it’s your first time getting a VA loan, your funding fee is generally lower. First-timers who put less than 5% down have a VA funding fee of 2.15%. If you’ve closed on a VA loan before and you’re putting less than 5% down, your funding fee is typically 3.3%. 

If you’re able to put up a bigger down payment or you have access to a Native American Direct Loan (NADL), your funding fee goes down to 1.25–1.5%. 

VA IRRRL and NADL refinances have funding fees of 0.5%. With a cash-out refinance, your funding fee will range from 2.15% (for VA loan first-timers) to 3.3% (for repeat users).

Can the VA funding fee be waived?

Yes. If you currently receive disability compensation from the VA or are eligible to get it, you can typically get the funding fee waived. Surviving spouses getting Dependency and Indemnity Compensation (DIC) are also eligible for a waiver, as are active-duty service members with a Purple Heart. 

Can I roll the VA funding fee into the loan?

Yes. This way, you pay less at the closing table.

Be advised, though, that adding the funding fee to the total amount you’re borrowing means you get charged interest on it. That makes it cost more overall. 

Additional common questions about VA loans

What are the VA’s minimum property requirements (MPRs)?

These are the standards to which the property must adhere for the VA to finance it. It needs to be safe, sanitary, and structurally sound. You need a consistent, drinkable water supply and functioning utilities, for example. 

The VA doesn’t care about cosmetic fixes or minor wear-and-tear, but it wants to make sure that the house is safely inhabitable. That’s because all VA loans have an occupancy requirement, which means you need to live at the property once the loan is closed. 

Can I apply for a VA loan if I’ve had a foreclosure or bankruptcy?

Yes, but not right away. With Chapter 7 bankruptcy and foreclosure, you usually have to wait at least two years. With Chapter 13 bankruptcy, you might be able to qualify for a VA loan if you’ve made 12 months of on-time payments.