Mortgage Basics
What Is a VA Loan?
A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs for eligible veterans, active-duty service members, and surviving spouses. VA loans offer zero down payment, no PMI, and typically lower interest rates — among the most favorable mortgage terms available.
VA Loan Key Features
Zero Down Payment
Eligible borrowers can finance 100% of the purchase price with no down payment required. No private mortgage insurance is required at any loan-to-value ratio — a major long-term savings compared to conventional and FHA loans.
Eligibility
Requires a Certificate of Eligibility (COE) from the VA. Generally: 90 days active service wartime, 181 days peacetime, or 6 years in National Guard/Reserves. Surviving spouses of eligible veterans may also qualify.
VA Funding Fee
A one-time funding fee (1.25%–3.3% of loan amount) is charged to sustain the program. Disabled veterans are typically exempt. The fee can be financed into the loan rather than paid at closing.
Usage Restrictions
VA loans must be used for primary residences only — not investment properties or vacation homes. There is no VA-set minimum credit score, though most lenders require 620+.
Real Estate Exam Key Points
VA loans are GUARANTEED by the Dept. of Veterans Affairs — not insured like FHA
Zero down payment allowed; no PMI required at any LTV
A Certificate of Eligibility (COE) is required before applying
A VA funding fee applies in most cases (disabled vets are exempt)
Must be primary residence — cannot be used for investment properties
VA does not set a minimum credit score; lenders typically require 620+
No loan limit for eligible borrowers with full entitlement (since 2020)
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