What makes a VA loan different
- No down payment: eligible borrowers can finance 100% of the purchase price up to the county limit, subject to the appraised value.
- No monthly mortgage insurance: unlike FHA and low-down conventional loans, there is no recurring mortgage insurance premium at all, which often saves hundreds of dollars a month.
- Competitive interest rates: the government guarantee reduces lender risk, and VA rates frequently price below comparable conventional loans.
- Limited closing costs: the VA restricts which fees a lender can charge a veteran, and caps the origination fee at 1% of the loan amount.
- No prepayment penalty: you can pay the loan down or off at any time without a charge.
- Assumable: a qualified buyer may take over your loan and its interest rate, which becomes valuable when market rates are higher than your locked rate.
The VA funding fee
In place of monthly mortgage insurance, the VA charges a one-time funding fee that supports the programme. The fee is a percentage of the loan amount and varies with your down payment and whether this is your first VA loan. On a first-use purchase loan the fee has recently been 2.15% with no money down, falling to 1.5% with 5% down and 1.25% with 10% or more. Subsequent uses cost more, at 3.3% with no money down.
The fee can be paid at closing or financed into the loan. Financing it is common but increases your balance and the interest you pay over time, so it is worth modelling both ways in the calculator above.
Importantly, the funding fee is waived entirely for veterans receiving VA compensation for a service-connected disability, for those who would be entitled to such compensation but for retirement pay, and for surviving spouses of veterans who died in service or from a service-connected disability. If you are exempt, the loan carries no mortgage insurance cost of any kind. Fee percentages are periodically revised by statute, so confirm the current schedule on the VA's site.
Eligibility and the Certificate of Eligibility
Eligibility is driven by service history rather than by credit score or income alone. Broadly, it covers veterans meeting minimum active-duty service requirements, active-duty members who have served a qualifying continuous period, National Guard and Reserve members with sufficient qualifying service, and certain surviving spouses.
You prove eligibility with a Certificate of Eligibility (COE), which you can request online through the VA, through your lender's automated system, or by mail. Most lenders can pull it in minutes. The COE confirms eligibility and shows how much entitlement you have available.
The VA sets no minimum credit score. Lenders do, and 620 is a common threshold. The VA does apply a residual income test, which measures the discretionary income left after all major obligations, and it is a genuine underwriting factor rather than a formality.
Entitlement and loan limits
Entitlement is the amount the VA guarantees on your behalf. Since 2020, veterans with full entitlement have had no VA loan limit at all: the county limits that used to cap zero-down borrowing no longer apply to them, though lenders still impose their own maximums based on what you can afford.
County limits still matter if your entitlement is reduced, which happens when you have an active VA loan or previously defaulted on one. In that case the remaining entitlement determines how much you can borrow with no money down, and you may need a partial down payment above that threshold. Restoring entitlement after selling a home and paying off the prior VA loan is a routine process.
VA appraisals and minimum property requirements
Every VA purchase requires an appraisal by a VA-assigned appraiser, who establishes value and checks the home against the VA's minimum property requirements. The home must be safe, structurally sound and sanitary: working heating, safe electrical and plumbing, a roof with remaining life, no exposed lead paint hazards on older homes, adequate access, and no evidence of active infestation.
This protects buyers but does narrow the field. Fixer-uppers and properties sold strictly as-is often cannot pass, and sellers in competitive markets sometimes resist VA offers for this reason. Being pre-approved and working with an agent who has closed VA deals materially improves your position.
When a VA loan may not be the best choice
If you are exempt from the funding fee, a VA loan is almost impossible to beat. If you are not exempt and have both a large down payment and excellent credit, a conventional loan with 20% down carries no mortgage insurance and no funding fee, so it can be cheaper overall. VA financing is also unavailable for investment properties and second homes, since the programme requires you to occupy the property.
Frequently asked questions
Do VA loans require a down payment?
No. Borrowers with full entitlement can finance 100% of the purchase price, up to the appraised value. A down payment is optional and reduces the funding fee percentage.
Do VA loans have mortgage insurance or PMI?
No. There is no monthly mortgage insurance on a VA loan. The one-time funding fee replaces it, and that fee is waived for veterans receiving compensation for a service-connected disability.
How much is the VA funding fee?
It depends on your down payment and whether you have used the benefit before. A first-use purchase with no money down has recently been 2.15% of the loan amount, dropping with larger down payments and rising to 3.3% for subsequent use with no money down. Confirm current rates with the VA, as the schedule is set by statute and changes.
Can I use a VA loan more than once?
Yes. The benefit is reusable for life. Once you sell a home and pay off the prior VA loan, your entitlement is generally restored in full and can be used again.
Is there a VA loan limit?
Not for veterans with full entitlement, who have had no VA-imposed limit since 2020. County limits still apply to borrowers with reduced entitlement, typically because another VA loan is outstanding.
Reference sources
Related calculators
How this estimate is built
Principal and interest come from the standard amortization formula, worked through in full on the formula reference page. Property tax, insurance, PMI and loan-program figures layer on top from published assumptions — each one sourced, dated and listed on the methodology page. Every result here is an estimate built from public data, not a quote: confirm the specifics with a lender before relying on it.
For developers
This calculation is also available as a REST API and through an MCP server, both running the same engine as this page — so the figures match by construction rather than by convention. No key required.