A VA loan is one of the strongest home financing benefits available to people who have served. The loan is made by an approved private lender, but the U.S. Department of Veterans Affairs guarantees a portion of it, which reduces the lender’s risk. In exchange, eligible borrowers receive terms that are often better than other programs. Bethany Sanchez (NMLS #2425491) helps Scottsdale-area service members, veterans and surviving spouses understand and use the benefit.
Quick answer: VA loans commonly allow no down payment, do not require monthly mortgage insurance and have flexible credit and income guidelines. A one-time funding fee usually applies. They are only for primary residences. This is educational information, and approval is never guaranteed.
Who is eligible?
Eligibility depends on service history. In general, the following groups may qualify:
- Veterans who served the required length of time and were discharged under conditions other than dishonorable
- Active-duty service members who have served the minimum required period
- National Guard and Reserve members who meet service requirements
- Surviving spouses of service members who died in service or from a service-connected disability, and certain others
Requirements differ based on when and how you served, and the VA makes the final determination. The VA publishes current requirements on its home loans website.
The Certificate of Eligibility
A Certificate of Eligibility (COE) is the document that proves your eligibility and shows your entitlement, which is the amount the VA is prepared to guarantee. You can request a COE through the VA, and we can often request it electronically for you once you authorize us. To make it easier, have your discharge papers (DD Form 214) for veterans, or a statement of service for active-duty members, available.
Benefits of a VA loan
- Low or no down payment. Many eligible borrowers can buy without a down payment.
- No monthly mortgage insurance. Instead of monthly premiums, most borrowers pay a one-time funding fee, which may be financed.
- Flexible guidelines. VA underwriting considers the whole file, including residual income, and can be more flexible on credit than some other programs.
- Limits on closing costs. The VA restricts certain fees that borrowers can be charged, and sellers can contribute toward costs within program limits.
- Assumable loans. A qualified buyer may be able to assume a VA loan with approval, which can be an advantage when you sell.
- Reusable benefit. You can use the benefit more than once.
Costs to understand
Even with no down payment, you should plan for:
- Funding fee. This one-time fee depends on your service type, your down payment and whether it is your first use. It can usually be financed. Some borrowers are exempt, including many who receive VA disability compensation.
- Closing costs. These include appraisal, title, escrow, recording and prepaid items. Sellers may contribute toward certain costs.
- Property taxes and homeowners insurance, paid monthly through escrow in most cases.
- Inspections and repairs. A home inspection is recommended, and the VA appraisal may require repairs for safety or condition.
How VA underwriting works
VA lenders review credit, income, assets and debts like other lenders, and they also calculate residual income, the money left each month after major obligations such as taxes, housing costs and debts. Residual income guidelines depend on family size and region. This approach can help borrowers who have higher debt-to-income ratios but enough money left over to manage comfortably.
VA lenders typically set their own minimum credit score requirements, which vary. If you have been turned down elsewhere, a conversation with us may open options.
The VA appraisal and property standards
The VA appraisal estimates the home’s market value and confirms that the property meets minimum property requirements related to safety, sanitation and structural soundness. The VA assigns the appraiser. Your agent should know that you are using a VA loan so they can write the offer with the right contingencies and timelines. If the home appraises for less than the purchase price, you may be able to negotiate, pay the difference or walk away under the contract terms.
Refinancing with the VA
- Interest Rate Reduction Refinance Loan (IRRRL). A streamlined refinance for existing VA loans that can reduce documentation and, in some cases, skip the appraisal.
- VA cash-out refinance. Allows eligible borrowers to take cash from their equity or to refinance a non-VA loan into a VA loan, subject to program limits.
Always compare the closing costs to the expected benefit before refinancing.
VA loan or something else?
| Topic | VA loan | FHA loan | Conventional loan |
|---|---|---|---|
| Down payment | Often none | Low minimum | Low to larger |
| Monthly mortgage insurance | No | Yes | Yes, if the down payment is small |
| One-time fee | Funding fee (some exempt) | Upfront premium | None |
| Who qualifies | Eligible service members and spouses | Any qualified buyer | Any qualified buyer |
| Occupancy | Primary residence | Primary residence | Primary, second home or investment |
For many eligible borrowers, a VA loan is the strongest choice. We confirm that with your numbers rather than assuming.
Next steps
If you have served, ask us about your benefit. We can help you request your COE, estimate your costs and compare your options. Start with the Get Pre-Approved form or call (760) 713-3814. For general guidance, see our first-time homebuyer guide and the loan programs overview. Sunset Home Lending is a private company, not a government agency, and is not affiliated with or endorsed by the Department of Veterans Affairs.
Frequently asked questions
Do I need a down payment for a VA loan?
Most eligible borrowers with full entitlement can buy with no down payment, as long as the purchase price does not exceed the home's appraised value and they qualify for the loan. You will still pay closing costs unless the seller or lender covers them, and some borrowers with reduced entitlement may need a down payment.
Who is eligible for a VA loan?
Eligibility generally depends on length and character of service. It can include veterans, active-duty service members, some National Guard and Reserve members, and certain surviving spouses. The VA determines eligibility and issues a Certificate of Eligibility, which we can often request for you. Confirm current service requirements on the VA home loans website.
What is the VA funding fee?
The VA funding fee is a one-time charge that helps sustain the program. The amount depends on factors such as your type of service, your down payment and whether it is your first use of the benefit. It can usually be financed into the loan. Veterans receiving VA compensation for a service-connected disability and certain surviving spouses are exempt.
Can I use my VA loan benefit more than once?
Yes. The benefit is not a one-time use. After you sell a home and pay off the loan, you can generally restore your entitlement, and in some cases you can have more than one VA loan at the same time if you have remaining entitlement. We can review your entitlement and explain what is available.
Is there a VA loan limit?
For borrowers with full entitlement, the VA does not set a maximum loan amount, though lenders set their own limits based on your income, credit and the property. Borrowers with reduced entitlement may have a limit or may need a down payment on loans above a certain size.
Can I use a VA loan to buy an investment property?
No. VA loans are for primary residences, and you must intend to occupy the home. You can buy a multi-unit property of up to four units and live in one unit. If you want to buy a rental, see our investor loans.