VA Loan Guide: Eligibility, Funding Fee & Zero-Down Benefits

By the SimpleCalc Mortgage Editorial Team · Updated July 2026 · 7 min read · Loan Types

If you served in the U.S. military and you're buying a home, the VA loan benefit is probably the most valuable thing your service entitles you to — and it's genuinely underused. No down payment, no private mortgage insurance, rates that typically run below conventional, and more flexible credit standards. The numbers on these loans routinely beat what's available to non-veterans with the same financial profile. If you qualify and you're not using a VA loan, you need a specific reason.

How VA Loans Actually Work

The Department of Veterans Affairs doesn't issue mortgage loans — it guarantees a portion of them. VA-approved private lenders (banks, credit unions, mortgage companies) make the actual loans, and the VA's partial guarantee reduces the lender's risk if you default. That reduced risk is what allows lenders to offer better terms to VA borrowers than they'd offer to equivalent conventional borrowers. The VA's backing is the engine behind every advantage the loan provides.

Who Qualifies for VA Loan Eligibility

• Active-duty service members who have served at least 90 continuous days
• Veterans — requirements vary based on when you served; generally 90 days during wartime or 181 days during peacetime for full benefit
• National Guard and Reserve members — 6 years of service, or 90 or more days of active-duty orders under Title 10
• Unremarried surviving spouses of veterans who died in service or from a service-connected disability; also surviving spouses of POWs or MIAs in some circumstances

Confirming eligibility requires a Certificate of Eligibility (COE). Your lender can typically pull this electronically within minutes through the VA's system. You don't need to obtain it separately before you start the loan process.

The Advantages — Specific and Real

• No down payment required. Eligible veterans can finance 100% of the purchase price with no money down. On a $350,000 home, that means $0 down versus $17,500 for a 5% conventional down payment — or $70,000 for the 20% required to avoid PMI.
• No private mortgage insurance, ever. On a $300,000 loan at zero down, a conventional borrower would pay $150–$300/month in PMI. VA borrowers pay zero. Over the first 7 years before PMI would cancel on a conventional loan, that gap is $12,600–$25,200.
• Below-market interest rates. VA loans typically price 0.25%–0.5% lower than equivalent conventional loans. On a $300,000 loan over 30 years, that rate advantage alone is worth $15,000–$30,000 in total interest savings.
• More flexible credit requirements. The VA sets no minimum credit score. Individual lenders typically require 580–620, which is substantially more accessible than conventional underwriting for borrowers rebuilding credit.
• No prepayment penalty. Pay it off early, make extra payments, sell whenever — no fees for retiring the loan early.
• Limits on closing costs. The VA restricts certain fees lenders can charge, which can reduce closing costs compared to conventional loans.

The VA Funding Fee — What It Is and When It's Waived

VA loans don't have monthly PMI, but there is a one-time funding fee paid at closing or rolled into the loan balance. This fee sustains the VA loan program and substitutes for the mortgage insurance that lenders require on conventional low-down-payment loans.

At first use with no down payment, the fee is 2.15% — on a $300,000 loan, that's $6,450 added to your loan balance. Even so, the absence of monthly PMI typically recoups that cost within 3–4 years. Subsequent uses after the entitlement is restored carry a higher 3.30% fee, which changes the math somewhat — run the numbers carefully if this isn't your first VA loan.

VA Loan Limits — They Were Eliminated for Most Borrowers

Since January 2020, VA loan limits have been eliminated for veterans with full entitlement. Full entitlement means you've either never used a VA loan, or you've paid off a previous VA loan and had your entitlement restored. With full entitlement, you can borrow as much as a lender will approve with no required down payment — even in expensive markets. Borrowers with partial remaining entitlement still face limits based on county conforming loan limits. Ask your lender to verify your entitlement status before you assume the no-limit rule applies to you.

Using Your VA Benefit More Than Once

Most veterans don't realize this benefit is reusable. Your entitlement restores when you sell the home and pay off the VA loan, when another eligible veteran formally assumes your loan, or when you refinance into a conventional loan. You can also hold two VA loans simultaneously if you have remaining entitlement — useful when you're relocating and haven't yet sold the first home. Talk to a VA-knowledgeable lender about your specific entitlement situation before assuming you need to start from scratch.

Property Requirements: What the VA Appraisal Covers

The VA requires that purchased homes meet its Minimum Property Requirements — the home must be structurally sound, safe, and sanitary. The VA appraisal evaluates both value and minimum safety standards. What it doesn't do is catch every issue a thorough home inspector would find. Always get a full home inspection in addition to the VA appraisal — the appraisal is not a substitute. VA loans are for primary residences only and cannot be used to purchase investment properties.

Frequently Asked Questions