Who this is for
- Veterans and active-duty members who meet the service rules set by the VA.
- Some National Guard and Reserve members, depending on their years of service.
- Surviving spouses of members who died in service or from a service-related disability.
How it works, step by step
- Get your Certificate of Eligibility, or COE, a form that proves you qualify, from the VA or through a lender.
- Pick a lender who handles a lot of VA loans, since VA underwriting, the lender's review of your finances, and appraisals follow their own rules.
- Budget for the VA funding fee, a one-time charge of 0% to 3.3% that you can roll into the loan.
- You can use this benefit more than once, and in some cases you can even hold two VA loans at the same time.
Pros
- No down payment required at all, unlike most other loan types.
- No monthly mortgage insurance, which lowers your payment.
- Rates are often lower than conventional loans for the same borrower.
- Limits on which fees you can be charged by the lender.
Cons
- You pay the funding fee unless you are exempt, usually because of a service-connected disability rating.
- You can only use it for the home you live in, not a rental or vacation home.
- Some sellers and agents wrongly think VA loans are slow to close.