VA Home Loans

Benefits of VA Loans

VA-backed home loans offer several advantages designed to make homeownership more accessible for eligible veterans, service members and surviving spouses. The benefits available to you depend on your eligibility, entitlement, loan type and individual circumstances.

• No down payment may be required. VA does not require a down payment on eligible purchase loans when the sales price does not exceed the home's appraised value, although circumstances such as remaining entitlement or lender requirements can affect the amount needed.
• No monthly private mortgage insurance (PMI). VA-backed loans do not require the monthly PMI typically associated with some other low-down-payment mortgage options.
• Competitive financing. VA-backed purchase loans can offer competitive interest rates and terms.
• Limited closing costs. VA rules limit certain costs borrowers may be charged, and sellers or builders may be able to pay certain closing costs or concessions within VA guidelines.
• Your VA benefit can be used more than once. Eligible borrowers may be able to use their VA home loan benefit again after a previous VA loan, subject to entitlement and other requirements.
• VA refinancing options are available. Eligible borrowers may have options including the VA Interest Rate Reduction Refinance Loan (IRRRL) and VA-backed cash-out refinancing.

Who may be eligible for a VA Loan?

VA home loan eligibility is based on your service history and duty status. Veterans, active-duty service members, members of the National Guard and Reserve, and certain surviving spouses may qualify for the VA home loan benefit.

Service requirements vary depending on when you served, how long you served and your type of service. A Certificate of Eligibility (COE) confirms to a lender that you meet the VA's service requirements for the home loan benefit.

Having a COE is an important step, but it does not by itself guarantee loan approval. Borrowers must also meet applicable VA and lender requirements for credit, income, occupancy and the property being financed.

Not sure if you are eligible? Talk with Stuart

VA Funding Fee & Closing Costs

What Is the VA Funding Fee?

The VA funding fee is a one-time fee that applies to many VA-backed and VA direct home loans. The fee helps support the VA home loan program and reduce its cost to taxpayers.

Not every borrower has to pay the VA funding fee. Certain borrowers are exempt, including some veterans receiving or eligible to receive VA compensation for a service-connected disability, certain surviving spouses receiving Dependency and Indemnity Compensation (DIC), and qualifying active-duty Purple Heart recipients.

How Much Is the VA Funding Fee?

The amount depends on the type of VA loan, the loan amount and, for some loans, whether you have used your VA home loan benefit before and the amount of your down payment.

For VA purchase and construction loans, current funding-fee rates for non-exempt borrowers range from 1.25% to 3.3%, depending on down payment and whether it is the first or a subsequent use of the benefit. An IRRRL currently has a 0.5% funding fee for non-exempt borrowers.

Because funding-fee rules and individual circumstances can vary, your lender can determine the fee that applies to your specific loan.

Do I Have to Pay the VA Funding Fee Out of Pocket?

Not necessarily. The VA funding fee can generally be paid in full at closing or financed into the loan amount and paid over time.

If you finance the funding fee, it becomes part of your loan balance.

What About Other VA Loan Closing Costs?

VA borrowers may still have other closing costs, such as the VA appraisal fee, title-related charges, recording fees, taxes, insurance and applicable lender costs.

For a purchase transaction, sellers or builders may provide credits toward some or all allowable closing costs. VA also has specific rules governing seller concessions. Unlike the VA funding fee, other closing costs generally cannot simply be financed into the loan amount on a VA purchase loan.