VA Loans FAQ

What is a VA loan?

A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs. The VA does not lend money. Private lenders make the loan and the VA guarantees part of it. That guarantee is why lenders can offer no down payment and no monthly mortgage insurance to qualified veterans, active-duty service members, reservists, National Guard, and certain surviving spouses.

Who guarantees VA loans?

The U.S. Department of Veterans Affairs guarantees a portion of every VA loan. The guarantee covers the lender against loss if the borrower defaults. That backing is why VA lenders can extend 100% financing without monthly mortgage insurance.

What is a Certificate of Eligibility (COE)?

The COE is the VA document that confirms you qualify for the VA loan benefit and shows your entitlement. You need one to use your VA loan. Lenders can pull your COE electronically through the VA’s online COE request system in minutes — most veterans never see the paperwork. We pull it for you during the intake.

What is VA entitlement?

Entitlement is the dollar amount the VA guarantees on your loan. Full entitlement means the VA backs your loan with no county loan limit. Partial entitlement means you’ve used some of your benefit already (or had a prior VA loan loss) and the VA’s guarantee follows county loan limits. Most first-time VA users have full entitlement.

Is the VA loan benefit a one-time use?

No. You can use the VA loan benefit more than once. You can restore your entitlement after selling a VA-financed home, or use remaining entitlement to buy a second home in some cases. Veterans we work with have used the VA benefit two, three, even four times over their lives.

No SSN required. Takes about 2 minutes.

Who qualifies for a VA loan?

Veterans, active-duty service members, reservists and National Guard with enough service, and certain surviving spouses. Service time minimums vary by era. Most active duty need 90 continuous days. Most veterans need 24 months active service or the full period called. Reservists and Guard generally need 6 years. Surviving spouses of service members who died on active duty or from a service-connected disability also qualify.

How much service time do I need?

Wartime: 90 continuous days active duty. Peacetime: 181 days active duty. Reserves and National Guard: 6 years, with some exceptions for activation. Officers and enlisted have different paths in some eras. The VA’s eligibility chart on the COE controls — if your COE comes back eligible, you’re in.

Are surviving spouses eligible?

Yes, in three situations. One: the spouse of a service member who died on active duty. Two: the spouse of a veteran who died from a service-connected disability. Three: the spouse of a veteran who died from any cause but was rated permanently and totally disabled at the time of death (under DIC rules). Surviving spouses get the VA loan benefit including the funding fee waiver.

Does a dishonorable discharge disqualify me?

Yes. A dishonorable discharge is the one discharge type that automatically disqualifies a veteran from the VA loan benefit. Other-than-honorable, bad conduct, and general discharges can be reviewed case by case by the VA. Honorable and general (under honorable conditions) discharges qualify automatically.

Does my branch of service matter?

No. Army, Navy, Air Force, Marines, Coast Guard, and Space Force all qualify on the same terms. Public Health Service and NOAA Corps officers can also qualify under specific rules.

Why is a VA loan better than conventional for veterans?

Zero down vs. typically 5–20% down. No monthly PMI vs. PMI until you hit 20% equity on conventional. No VA minimum credit score vs. 620+ on most conventional. More flexible DTI rules. Lower rates in most markets. The trade-off is the one-time VA funding fee, which is often waived (disability) or rolled into the loan.

VA vs FHA — which is better for veterans?

VA wins for almost every qualified veteran. FHA requires 3.5% down. VA requires zero. FHA charges upfront mortgage insurance premium AND monthly mortgage insurance for the life of the loan in most cases. VA charges only the one-time funding fee (often exempt). The only time FHA beats VA is when a veteran has zero entitlement and can’t restore it, or when a specific FHA product fits a niche situation.

Does VA require monthly mortgage insurance?

No. The VA loan has zero monthly PMI or MIP. Ever. This is one of the program’s biggest advantages over FHA and low-down-payment conventional loans. Instead, the VA charges a one-time funding fee at closing (which can be rolled into the loan and is waived for disabled veterans).

Are VA loan rates lower?

In most markets, yes. VA rates run about 0.25%–0.50% below conventional for comparable credit profiles. The VA’s guarantee reduces the lender’s risk, and lenders pass some of that savings through. Combined with no PMI, the effective monthly cost difference is even larger than the rate gap shows.

What credit score do I need for a VA loan?

The VA has no minimum credit score. That comes from the VA Lender’s Handbook directly. Most lenders add their own overlays — usually 580, 600, or 620 — because they don’t want to manually underwrite low-score files. We are a no-overlay lender, which means we follow VA guidelines without adding our own credit floor. Lower scores require manual underwriting, strong compensating factors, and clean recent housing payment history.

Can I get a VA loan with a 500 credit score?

Yes, if the rest of the file supports it. A 500 score requires manual underwriting, no 30-day mortgage lates in the last 12 months, strong residual income, and usually compensating factors like cash reserves or steady employment. Most lenders won’t touch a 500-score VA file. We will, because the VA itself doesn’t set a minimum. The lower the score, the more the underwriter needs to see on the income and asset side.

Can I get a VA loan with a 580 or 600 credit score?

Yes. 580 and 600 scores are common VA approvals. Both still typically require manual underwriting unless your automated approval comes back as Approve/Eligible. Strong residual income, clean recent housing history, and stable employment usually carry the file through.

Why do other lenders require 620+ when the VA has no minimum?

Lender overlays. Overlays are extra rules a lender adds on top of VA guidelines to reduce their own risk. Most retail lenders set a 620 floor because their underwriting teams don’t want to do manual reviews. We don’t add overlays. We follow the VA’s actual rules.

What does “no-overlay lender” mean?

A no-overlay lender follows the VA Lender’s Handbook without adding extra restrictions. No minimum credit score overlay. No DTI overlay beyond what the VA itself sets. No mortgage history overlay tighter than VA rules. This is why veterans denied by big-box lenders often get approved with us — the file was always approvable; another lender’s overlay was the only thing in the way.

Will my credit score drop when I apply?

A little. A mortgage hard inquiry typically drops your score by a few points. Multiple mortgage inquiries within a 45-day window count as one inquiry for scoring purposes, so shopping rates won’t pile up the hit. Avoid opening new credit cards or auto loans during your application — those hurt more.

Can I get a VA loan after bankruptcy?

Yes, after the waiting period. Chapter 7: 2 years from discharge date. Chapter 13: 12 months of on-time payments and court approval (sometimes you don’t even have to wait for full discharge). Extenuating circumstances can shorten both. Re-established credit since the bankruptcy is essential.

Can I get a VA loan after foreclosure?

Yes, after 2 years from the foreclosure completion date in most cases. If the foreclosure was on a previous VA loan, the loss may eat into your entitlement until you repay the VA. Extenuating circumstances can shorten the wait. Re-established credit is required.

What are the waiting periods for short sale and deed-in-lieu?

2 years from completion in most cases — same as foreclosure. Short sales without prior delinquency may qualify sooner. Always document the cause and outcome of the event in the loan file.

What qualifies as extenuating circumstances for a VA loan?

Extenuating circumstances are one-time, beyond-your-control events that caused a credit problem — job loss, medical emergency, divorce-related hardship, natural disaster damage to a previous home, or military deployment disruption. They are not chronic financial mismanagement. The VA allows shorter waiting periods after bankruptcy, foreclosure, or short sale if you can document the extenuating circumstance, prove it is no longer present, and show re-established credit since the event.

How do I prove extenuating circumstances?

Three things. One: a clear letter of explanation describing what happened. Two: documentation of the event itself — termination notice, medical records, divorce decree, insurance claim, deployment orders. Three: evidence that the event is over and your finances have stabilized — pay stubs, savings, current debt status, no new delinquencies. The underwriter has to be able to read the story and see it makes sense.

Can I get a VA loan after a divorce-related financial hardship?

Often yes. Divorce that triggered foreclosure, short sale, or bankruptcy can be presented as an extenuating circumstance. You’ll need the divorce decree, documentation of the hardship, and proof your finances stabilized after. Strong recent credit since the event is essential.

Can I get a VA loan if my previous home was damaged in a natural disaster?

Yes. Natural disaster damage is a classic extenuating circumstance. Provide insurance claims, FEMA documentation, news coverage of the event if relevant, and your re-established credit since the event. The VA understands a hurricane or wildfire is not the borrower’s fault.

How do I write a letter of explanation for extenuating circumstances?

Keep it short, direct, and factual. Three parts. One: what happened (the event), with dates. Two: what it did to your finances (the credit damage). Three: how you fixed it and what’s different now (stability, savings, on-time payments). One page is plenty. Don’t write a memoir. The underwriter needs the timeline and the outcome, not the emotion.

Can I appeal a VA loan denial?

It depends on what got denied. If automated underwriting refused, manual underwriting may approve the same file. If the denial came from a lender overlay (credit score, DTI), another lender without that overlay can re-run the file. If the VA itself denied your COE or entitlement, you can file a formal appeal with the VA Regional Loan Center. Most denials are lender overlays, not actual VA denials.

No SSN required. Takes about 2 minutes.

Can I get a VA loan with late payments?

Maybe. The VA expects no 30-day mortgage lates in the last 12 months. One isolated 30-day late with a strong letter of explanation may still be approvable on manual underwriting if the file is otherwise strong. Multiple lates or any 60-day late inside the last 12 months will usually require additional seasoning before approval.

How do late payments affect my VA loan eligibility?

Recent mortgage lates hurt the most. The VA cares most about the last 12 months of housing payments. Late credit card and consumer debt payments matter less but still need to be explained. Older lates (12+ months) generally don’t block approval if recent payment history is clean.

Can I refinance a VA loan if I had late payments before?

Yes, with caveats. For a VA IRRRL, the last 12 months of mortgage payments need to be clean (no 30-day lates). For a VA cash-out, the same rule applies and the rest of your credit profile goes through full underwriting. Older lates that have aged out of the last 12 months usually don’t block refinance approval.

Can I use a VA loan if I had late mortgage payments on a previous property?

Yes, if the lates are outside the 12-month window. If recent (within 12 months), expect manual underwriting and a letter of explanation. The VA looks at your housing payment history as the strongest predictor of future performance.

What about medical collections?

Medical collections are handled more leniently than other collections under both VA rules and current FICO scoring. The VA generally does not require medical collections to be paid off before closing. Older medical collections may not even appear on your current credit report — recent scoring models exclude paid medical collections and unpaid medical collections under $500.

What about judgments or tax liens?

Open judgments must usually be paid or on a documented payment plan with 3+ months of on-time payments before closing. Tax liens (federal or state) need to be either paid off or on an IRS payment agreement with documented payments. The VA wants to see active liens addressed so they don’t shadow the new mortgage.

What income counts for a VA loan?

Stable, recurring income from any verifiable source. Base pay, overtime, bonus (with 2-year history), commission, self-employment, military allowances (BAH, BAS), retirement, Social Security, disability, child support and alimony (with court order), and rental income. The income has to be likely to continue at least 3 years to be fully usable.

Does BAH (Basic Allowance for Housing) count as income?

Yes. BAH is one of the most powerful income types for VA loan qualifying because it’s tax-free and the full gross amount counts. We use the current BAH rate for the duty station where the home will be located, or for an inbound PCS the BAH rate of the new station. BAS (Basic Allowance for Subsistence) also counts.

Can self-employed veterans get a VA loan?

Yes. Self-employed veterans qualify on 2 years of tax returns showing stable or growing income. The VA averages two years of net business income (after write-offs). If your tax returns show big depreciation or one-time write-offs, those can sometimes be added back. We’ve also closed self-employed VA borrowers using bank statement programs when tax returns don’t tell the right story.

How do self-employed veterans qualify for a VA loan?

Self-employed veterans qualify using two years of personal and business tax returns plus a current year-to-date profit and loss statement. The VA averages the most recent two years of net business income. Common add-backs include depreciation, depletion, business use of home, and other non-cash items — these can lift the qualifying income above what tax returns show on the surface. If two years of returns show stable or growing income, qualifying is straightforward. Declining year-over-year income usually requires a letter of explanation.

What if I’m self-employed less than 2 years?

The VA typically requires a 2-year self-employment history. Exceptions exist if you’re working in the same field where you previously had W-2 employment — the prior W-2 history can count toward the 2-year requirement. If you’re brand new to self-employment with no related W-2 history, a Non-QM bank statement loan or 1099 income loan may be the better path — those programs qualify on 12-24 months of bank statements or 1099 income directly, no tax returns required.

Can I use bonus or commission income to qualify for a VA loan?

Yes. Bonus and commission income count as qualifying income with a 2-year history. The lender averages the two most recent years and uses that monthly average. Declining commissions year over year need a letter of explanation. Some files with only 1 year of bonus or commission history may still qualify if the rest of the file is strong — talk to us before assuming you don’t qualify.

Does child support or alimony count as income on a VA loan?

Yes, when documented and likely to continue. Requirements: a court order or separation agreement documenting the payment amount, evidence of consistent receipt for at least 6 months, and proof the income will continue for at least 3 years from loan closing. Tax-free child support can be grossed up — typically by 25% — to reflect its real spending power vs taxable income.

Does VA disability count as income?

Yes — and it’s tax-free, so the gross amount counts toward qualifying. The VA disability award letter is the documentation. SSDI and other federal disability benefits also count when documented and expected to continue 3+ years.

Does retirement income count for VA loan qualifying?

Yes. Military retirement pay, civilian pensions, Social Security retirement benefits, and qualified retirement account distributions all count as qualifying income when documented. The income must be expected to continue at least 3 years from loan closing. Tax-free portions can be grossed up to reflect their equivalent taxable income value.

How is pension income treated on a VA loan?

Pension income counts at 100% when the lender has the pension award letter showing the monthly amount and continuance. Military retirement pay, federal civil service retirement, and most private-sector pensions all qualify. If the pension is tax-free or partially tax-free, the tax-free portion can be grossed up.

Can 401(k) or IRA distributions be used to qualify for a VA loan?

Yes, with documentation. Required: evidence the distributions have been received consistently for at least 2 months, the account balance is sufficient to support the distributions for at least 3 more years, and the borrower is at an age where penalty-free distributions are allowed (typically 59½ or older). Lump-sum withdrawals don’t count — the income has to be set up as a recurring distribution.

Can I get a VA loan with a gap in employment?

Yes, in most cases. The VA expects a 2-year employment history but recognizes real life includes gaps. Short gaps (less than 30 days) generally don’t need explanation. Longer gaps — for school, military service, military-to-civilian transition, family care, or medical recovery — are routinely approved with a letter of explanation. Returning to the same field after a gap is the cleanest path.

How long can my employment gap be before it disqualifies me?

There is no fixed VA disqualifier for gap length. Gaps of 30 days to 6 months generally need a letter of explanation. Gaps longer than 6 months may need additional documentation — school transcripts, military separation paperwork, medical records, or other proof of what you were doing. The underwriter’s real question is: is your current income stable, and can you show why it will continue?

How do I explain a gap in employment on a VA loan application?

Write a short, factual letter of explanation. Three parts: dates of the gap, what you were doing during it (school, military service, family care, medical), and why your current employment is stable. Attach supporting documents — DD-214, school transcript, medical records, etc. One page is plenty. Don’t over-explain. The underwriter needs the timeline and a credible reason, not your life story.

What is the maximum DTI on a VA loan?

The VA does not publish a hard DTI cap. Automated underwriting can approve VA loans up to about 60% DTI when residual income, credit, and reserves are strong. Manual underwriting typically targets 41% DTI or below — higher only with strong residual income above the minimum or other compensating factors.

How do deferred student loans affect VA loan qualifying?

Deferred student loans still count toward your DTI calculation. The VA does not let you exclude them just because the current payment is $0. The lender uses a calculated payment based on the loan balance or your documented payment plan to figure your DTI.

How does the VA calculate the payment on deferred student loans?

The VA uses the GREATER of two numbers: (1) the actual monthly payment shown on your credit report or documented in your loan paperwork, or (2) 5% of the outstanding student loan balance divided by 12. The “5% / 12” math is what most veterans aren’t told until they apply. Example: a $50,000 student loan balance × 5% = $2,500, divided by 12 = $208/month. If your credit report shows a $300/month payment, the underwriter uses $300. If it shows $0 because deferred, the underwriter uses $208.

Can I qualify for a VA loan with student loans in deferment or forbearance?

Yes. Deferment or forbearance status doesn’t disqualify you. The lender just uses the calculated payment (greater of documented payment or 5% of balance ÷ 12) in your DTI. If the calculated payment pushes your DTI above the lender’s threshold, the path is usually to either lower the loan amount, pay down other debts, or document a lower payment via an income-driven repayment plan with the loan servicer.

What is residual income on a VA loan?

Residual income is the money you have left over after paying your mortgage, taxes, insurance, debts, and basic living expenses. The VA publishes minimum residual income tables by family size and region (Northeast, Midwest, South, West). Strong residual income can offset a higher DTI and is one of the key reasons VA loans approve when conventional loans deny.

How do I calculate my residual income?

Start with gross monthly income. Subtract federal and state taxes, FICA, the new total housing payment (PITI plus HOA), monthly debt payments, child care, child support, and maintenance/utility estimates (the VA uses an $0.14 per square foot per month figure for utilities). What’s left is your residual income. Compare it to the VA’s table for your region and family size. We run this for you during the intake.

What is VA manual underwriting?

Manual underwriting is when a human underwriter reviews your file instead of relying on an automated approval. The VA requires manual underwriting when your automated approval comes back as Refer or when you have a recent credit event. Manual underwriting uses VA-specific rules — residual income, compensating factors, recent housing history — that automated systems don’t read well.

When is manual underwriting required?

Common triggers: automated underwriting returned Refer; recent bankruptcy, foreclosure, or short sale; recent 30-day mortgage lates; thin credit file (few or no tradelines); non-traditional credit; or extenuating circumstance scenarios. Manual underwriting isn’t a denial — it’s just a different path.

Why do some lenders refuse manual underwriting?

It takes more underwriter time, requires more documentation review, and not every underwriting team is trained on VA manual underwriting rules. Many big retail lenders cap their files at automated approvals only. We don’t. Manual underwriting is part of our standard workflow.

What are compensating factors in VA manual underwriting?

Compensating factors are positives in your file that offset a weakness. Examples: residual income at 120%+ of the VA minimum; meaningful cash reserves; long-term employment stability; minimal increase in housing payment over current rent; significant down payment; high credit score on top of a credit event; long credit history. The underwriter weighs them against the weakness in the file.

How long does manual underwriting take?

A few days longer than automated approval, not weeks longer. A clean manual file with complete documentation can close on the same timeline as an automated approval. Slowdowns come from missing letters of explanation, incomplete tax returns, or last-minute credit issues — not from the manual review itself.

What is the VA funding fee?

The VA funding fee is a one-time fee paid to the VA at closing. It helps keep the VA loan program self-funded and supported without taxpayer cost. The fee is a percentage of the loan amount and varies by loan type (purchase vs IRRRL vs cash-out), first-time use vs subsequent use, and whether you’re putting any money down.

How much is the VA funding fee?

For a VA purchase with zero down: 2.15% first-time use, 3.30% subsequent use. With 5% down: 1.50% / 1.50%. With 10% down: 1.25% / 1.25%. VA IRRRL: 0.50% flat. VA cash-out refinance: 2.15% / 3.30%. Reserves/Guard had higher fees historically but were equalized to the same rates as regular military. These percentages can change — confirm at closing.

Who is exempt from the VA funding fee?

Three groups. One: veterans receiving VA disability compensation (any rating). Two: veterans entitled to VA disability who receive military retirement pay instead. Three: surviving spouses receiving DIC benefits. Purple Heart recipients currently on active duty are also exempt. The exemption appears on your COE — we verify it for you.

Can the funding fee be rolled into the loan?

Yes. The funding fee can be financed on top of the loan amount up to the VA loan limit (or unlimited with full entitlement). Most veterans roll the fee into the loan to keep cash at closing as low as possible.

Can I get the funding fee refunded?

Sometimes. If your VA disability claim was pending at closing and gets approved retroactive to a date before closing, you may be entitled to a funding fee refund. The refund is processed through the VA, not through the lender. We can help walk you through the request.

Are 100% disabled veterans exempt from the VA funding fee?

Yes. Veterans receiving VA compensation for a service-connected disability are exempt from the funding fee — this includes any disability rating, not just 100%. 100% disabled veterans get the exemption automatically once your VA disability award letter or COE shows the exempt status.

Can I get a VA mortgage with no down payment if I have 100% VA disability?

Yes. The VA loan allows 100% financing for all qualified veterans regardless of disability rating. The 100% disability rating only adds a benefit on top — the funding fee waiver. So a 100% disabled veteran can buy a home with no down payment AND no funding fee, which is the lowest total out-of-pocket of any mortgage program available.

What other benefits come with a 100% VA disability rating?

Funding fee waiver. Often state-level property tax exemptions (rules vary by state — Colorado, Texas, Florida, and most others offer significant or full exemptions for permanently and totally disabled veterans). VA monthly compensation that counts as tax-free income for qualifying. Eligibility for the Specially Adapted Housing (SAH) grant for accessibility modifications. Caregiver benefits in some cases. Talk to your state veterans affairs office for state-specific benefits.

Are there property tax exemptions for 100% disabled veterans?

In most states, yes. The exemption amount varies. Some states offer 100% property tax exemption on the primary residence for permanently and totally disabled veterans (Texas, Florida, others). Other states offer partial exemptions or income-based exemptions. The exemption usually applies only to your primary residence and requires application through your county tax assessor’s office. We don’t process the exemption — but we’ll point you to the right form for your state.

Can I use my 100% VA disability for a second VA home loan?

Yes. The 100% disability rating gives you a permanent funding fee waiver on any VA loan you take out, including subsequent uses. As long as you have remaining entitlement (or restore it), you can use your VA benefit again — and the funding fee will still be waived because of the disability.

How do I prove disability for the funding fee exemption?

Your COE will usually show the exemption status. If it doesn’t, your VA disability award letter (the one stating your rating and compensation amount) does the job. We pull both during the application — most veterans don’t have to chase paperwork.

No SSN required. Takes about 2 minutes.

Are there VA loan limits?

The VA itself does not cap how much you can borrow. Effective January 1, 2020, there are no county loan limits for veterans with full VA entitlement. Loan size is governed by what the lender approves and what your income supports. County loan limits only come back into play for veterans with partial entitlement.

What’s the difference between full and partial entitlement?

Full entitlement means either (a) you’ve never used your VA loan benefit, or (b) you’ve paid off all prior VA loans in full AND the homes were sold, or (c) you had a prior VA loan loss that was repaid to the VA. Partial entitlement means a portion of your benefit is tied up — you still have an active VA loan on another property, OR you had a prior VA loan loss (short sale, foreclosure, deed-in-lieu) that has not been repaid. Full entitlement = no county loan limit. Partial entitlement = FHFA county loan limits apply to the VA’s guaranty math.

When do FHFA loan limits apply to a VA loan?

Only when you have partial entitlement. In that case, the VA caps its maximum guaranty using the FHFA conforming loan limit for the county where you’re buying — specifically the One-Unit Limit. The VA pulls the FHFA number, not its own number. With full entitlement, FHFA limits don’t factor into your loan at all.

How does the VA’s maximum guaranty work with partial entitlement?

The VA guarantees 25% of the loan amount up to a maximum tied to the county loan limit. With partial entitlement, your remaining entitlement = 25% of the county FHFA loan limit, reduced by the amount of entitlement you’ve already used and not restored. For a loan amount above what your remaining entitlement covers, the lender requires a down payment equal to 25% of the difference — that keeps the lender’s required 25% backing intact. The VA publishes guaranty calculation examples walking through real scenarios.

What if I had a prior VA loan loss (short sale or foreclosure)?

A prior VA loan loss (foreclosure, short sale, or deed-in-lieu where the VA paid a claim to the lender) reduces your entitlement until the VA is reimbursed for the loss. You can still get a new VA loan after the waiting period, but FHFA county loan limits will apply and a down payment may be required for loans above your remaining entitlement. Repaying the loss to the VA in full restores your entitlement back to full status. We walk through the math case by case at intake.

Can I use my VA loan benefit a second time?

Yes. The VA loan benefit is a lifetime benefit you can use again and again. Three common second-use scenarios: (1) Sold the first VA-financed home and paid off the loan — full entitlement is restored once you request it. (2) Still own the first VA-financed home and want a second VA loan on a new primary residence — possible with partial entitlement and the FHFA county loan limit math. (3) PCSing to a new duty station — you can keep the departure home and buy a new primary with remaining entitlement. Each scenario has different math; we walk through it at intake.

Can I get a VA jumbo loan?

Yes. With full entitlement, there is no upper limit set by the VA — the cap comes from lender pricing and your income. Loans above the county conforming limit are called VA jumbo and typically still require zero down. Rates and pricing on VA jumbo are very competitive compared to conventional jumbo.

How do I restore my VA entitlement?

Two ways. One: sell the home with the prior VA loan and have the loan paid off in full at closing. Two: have another qualified veteran assume your VA loan (rare). After payoff, you file a request with the VA to restore your entitlement. If you had a foreclosure or short sale loss on a prior VA loan, you have to repay that loss to the VA before entitlement is restored.

Do I need a down payment for a VA loan?

No, in most cases. The VA loan allows 100% financing on the appraised value. A down payment is only required if you have partial entitlement, if the home’s price exceeds your entitlement plus county loan limit, or if the appraisal comes in below the purchase price.

Are gift funds allowed on a VA loan?

Yes. Family members, spouses, and certain other parties can gift funds toward closing costs or any required down payment. A gift letter is required documenting the donor, the relationship, the amount, and a statement that no repayment is expected. Source of funds documentation is required.

Can I buy a home with zero out of pocket on a VA loan?

Often yes. Combine three things: zero down (VA standard), seller-paid closing costs (no VA cap on this bucket), and seller concessions covering the funding fee and prepaids (up to 4% of loan amount). Many veterans close with zero out of pocket when the deal is structured correctly. We do this often.

What if I want to put money down anyway?

You can. Putting 5% down lowers the funding fee from 2.15% to 1.50%. Putting 10% down lowers it to 1.25%. There’s no rule against putting any amount down on a VA loan, and some veterans choose to put money down to lower their monthly payment, qualify for a larger loan, or reduce the loan balance from day one.

What are VA seller concessions?

Seller concessions on a VA loan are payments the seller makes on the buyer’s behalf that go beyond normal seller-paid closing costs. The VA caps concessions at 4% of the loan amount. Concessions can pay the VA funding fee, prepay property taxes and insurance, pay off the buyer’s debt to qualify, gift household items like appliances, and cover discount points beyond what’s customary. Standard seller-paid closing costs (title, recording, transfer taxes) do not count toward the 4% cap.

How much can the seller pay on a VA loan?

Two buckets. Bucket one: normal seller-paid closing costs (title, recording, transfer tax, attorney, etc.) — no VA cap. Bucket two: seller concessions (funding fee, prepaids, debt payoff, gifted items, discount points beyond customary) — capped at 4% of the loan amount. The two buckets stack. Many veterans close with zero out-of-pocket by structuring both buckets correctly.

Can seller concessions cover the VA funding fee?

Yes. The VA funding fee is one of the specific items the 4% concession allowance can pay. This is one of the most common uses of the concession bucket because it lets the veteran buy the home with truly zero out-of-pocket.

Can VA seller concessions be used to pay off debt?

Yes, and this is one of the most powerful uses. The 4% concession bucket can be used to pay off the buyer’s installment debts, credit cards, or judgments to lower DTI and qualify. Some lenders won’t structure deals this way because they don’t know the rule. We do this often.

What’s the difference between seller-paid closing costs and seller concessions?

Closing costs (bucket one): items the seller can pay that are normally a buyer expense — title insurance, recording fees, transfer taxes, attorney fees, the buyer’s portion of prepaids that are customary. No VA cap. Concessions (bucket two): items beyond normal closing costs — funding fee, prepays for taxes/insurance beyond the customary period, paying off the buyer’s debt, gifting personal property like a washer/dryer or refrigerator. Capped at 4% of the loan amount.

What is the VA seller concessions guideline?

Per the VA Lender’s Handbook: seller concessions are limited to 4% of the loan amount. Items beyond what’s considered customary or reasonable closing cost may count as concessions. Items the VA explicitly allows under the 4% cap include the funding fee, prepaid taxes and insurance, buyer debt payoff, and gifted household goods. Items NOT allowed: cash to the buyer at closing.

Does a VA loan require an appraisal?

For a VA purchase or VA cash-out refinance: yes. The appraisal is ordered by the lender through the VA’s portal, and a VA-approved appraiser does the work. For a VA IRRRL: usually no — that’s one of the main benefits of the streamline.

How does a VA appraisal differ from a regular appraisal?

Two things. One: the appraiser is VA-approved and follows VA-specific instructions. Two: the appraisal includes a check for Minimum Property Requirements (MPRs) — safety and habitability items the VA requires before guaranteeing the loan. Most conventional appraisals don’t have this safety check layer.

What are VA Minimum Property Requirements (MPRs)?

MPRs are safety and habitability standards the home must meet. Common ones: working heat, safe electrical, no exposed/peeling lead paint, missing handrails on stairs, broken windows, holes in roof, evidence of termites, structurally sound foundation, working plumbing, water source and sewer/septic functional. If an MPR fails, the issue must be fixed before closing.

What is the Tidewater Initiative?

Tidewater is a VA procedure that triggers when the appraisal comes in below the contract price. Before finalizing the low value, the appraiser notifies the lender, who then has 48 hours to submit additional comps or evidence supporting a higher value. This can save the deal when the first comp set missed similar homes.

What is the VA Escape Clause?

The VA Escape Clause is a federally required clause in every VA purchase contract. It says the veteran is not obligated to complete the purchase if the appraisal comes in below the purchase price — and the veteran can have their earnest money refunded. The veteran can still proceed (with the price renegotiated or by paying the difference in cash), but the choice belongs to the buyer.

Does VA require a termite inspection?

In many states, yes. Most southern and humid states require a wood destroying organism (WDO) report on VA loans — and per VA policy, the buyer typically cannot pay for the report. The seller, lender, or another party usually covers it. State rules vary. We’ll confirm for your specific state at intake.

What if the home has well or septic?

Well water requires a water quality test. Septic requires a septic inspection if there are visible signs of a problem or if local code requires one. Both are handled during the appraisal/inspection phase. Rural and outlying markets see a lot of well-and-septic VA closings.

What property types qualify for a VA loan?

Single-family homes (SFR), townhomes, planned unit developments (PUDs), VA-approved condos, 2-to-4 unit homes (you must occupy one unit), modular homes on permanent foundations, and some manufactured homes on permanent foundations meeting strict VA requirements. The home must be your primary residence.

Can I buy a condo with a VA loan?

Yes, if the condo project is VA-approved. The VA maintains a list of approved condo projects. If your target condo isn’t on the list, the lender can request approval — but this adds time (sometimes weeks) and isn’t always granted. Check the VA’s condo lookup before going under contract.

Can I buy a multi-unit property (2-4 units) with a VA loan?

Yes. You can buy a duplex, triplex, or fourplex with a VA loan if you occupy one of the units as your primary residence. You can rent out the other units and use that rental income to help qualify. This is one of the best wealth-building plays the VA loan enables — buy a 4-plex, live in one unit, let three tenants cover most of the mortgage.

Can I buy a manufactured home with a VA loan?

Yes, in some cases, but the rules are stricter than other property types. The home must be on a permanent foundation, classified as real estate (not personal property), meet HUD code, and the lender must be willing to finance it. Many big lenders don’t do manufactured-home VA loans. Modular homes (factory-built but assembled on-site like a stick-built home) have far fewer restrictions.

Can I buy an investment property with a VA loan?

No, not directly. The VA loan is for primary residences only. The closest path is buying a 2-to-4 unit and living in one unit (you occupy, the others are rented). Pure rental properties or second homes aren’t VA eligible.

Can I use a VA loan for new construction?

Yes. The VA loan covers new construction in two ways. First: a VA construction-to-permanent loan that funds the build and converts to a permanent VA mortgage at completion. Second: end-loan financing where a builder finances construction and the veteran takes out a VA loan only after the home is built. The construction-to-perm path is less common in the market because few lenders offer it. The end-loan path is the most common way veterans buy new construction.

Does a VA loan cover new construction?

Yes. The VA loan can finance both completed new construction (move-in ready) and ground-up construction with a VA construction-to-permanent loan. For completed new construction, the home must have a one-year builder warranty (or a VA Builder ID, HUD/FHA approval, or a 10-year insured warranty) and pass the VA appraisal.

How does a VA loan work with new construction?

Two paths. Path 1 (end-loan): the builder uses their own construction financing, you sign a purchase contract, and you close on a standard VA loan at completion — same as a resale home purchase. Path 2 (construction-to-permanent): the VA loan funds the build in draws, then converts to a permanent VA mortgage at completion. Path 1 is what 95% of veterans buying new construction actually do.

What are VA loan requirements for new construction?

For end-loan VA on completed new construction: the property must pass VA appraisal and MPRs, the builder must provide one of the required warranties (1-year builder, VA Builder ID, HUD/FHA approval, or 10-year insured), and the home must be ready for occupancy. For VA construction-to-permanent: the builder must be approved by the lender, plans and specs must be VA-acceptable, draws are managed by the lender, and an appraisal is done on plans and again at completion.

Can I use a VA loan for land and new construction together?

Yes, through a VA construction-to-permanent loan. The loan can cover the land purchase and the construction costs together, then convert to a permanent VA mortgage at completion. This is the right path if you already own the land or plan to buy raw land and build. Veterans without this need typically use the end-loan path.

What lenders offer VA new construction loans?

Few. Most big retail lenders only do VA end-loans on completed homes. We do both — VA construction-to-permanent and end-loan financing. If you’re shopping for a true VA construction-to-permanent loan, you’ll find a small number of lenders in the market that offer it.

What are the termite requirements for VA new construction?

VA new construction in termite-affected states requires either soil treatment for termites before slab/foundation is poured OR a wood-destroying organism (WDO) report at completion. Form NPMA-99-A (soil treatment) or NPMA-99-B (post-construction treatment) typically documents this. Your builder usually handles it as part of the build.

What builder requirements apply to VA new construction?

For VA end-loan financing on completed new construction, the builder must provide one of: (a) a one-year builder warranty, (b) a VA Builder ID with the home enrolled, (c) HUD/FHA approval, or (d) a 10-year insured warranty (like 2-10 Home Buyers Warranty). For VA construction-to-permanent, the builder also has to be approved by the lender and provide plans, specs, and a construction contract. Owner-builders are usually not allowed for VA construction-to-permanent.

No SSN required. Takes about 2 minutes.

What is a VA IRRRL?

IRRRL stands for Interest Rate Reduction Refinance Loan. It is the VA streamline refinance. You can only IRRRL an existing VA loan into another VA loan. The IRRRL is built for speed — no full appraisal in most cases, no income verification in most cases, no DTI calculation, and a streamlined credit review. The new loan must lower your interest rate (or convert ARM to fixed). Closing costs roll into the new loan.

Who qualifies for a VA IRRRL?

Three requirements. One: you currently have a VA loan in place on the home. Two: you’ve made at least 6 monthly payments and at least 210 days have passed since your first payment due date. Three: the new loan must lower your rate (or convert an ARM to fixed). You also need to certify that you previously occupied the home as your primary residence — current occupancy isn’t required.

Does a VA IRRRL require an appraisal?

Usually no. The VA does not require a full appraisal for an IRRRL in most cases. The new loan is based on the existing VA loan and the rate reduction. Some lenders order a property condition review, but a full URAR appraisal is generally not required. This is one of the reasons an IRRRL can close in as little as 14 days.

What is the IRRRL recoup rule?

The total closing costs on the IRRRL must be recouped (paid back through monthly savings) within 36 months. If your monthly payment drops by $200, you have a $7,200 max budget for closing costs. This rule exists to protect veterans from refinances that don’t actually save them money.

Can I get cash back at closing on an IRRRL?

No, with one tiny exception. The IRRRL allows up to $500 cash back at closing — typically refunded prepaid items like escrow overage. Beyond that, no cash to the borrower. If you need cash from the home, you need a VA cash-out refinance, not an IRRRL.

Does the IRRRL require occupancy verification?

No. Unlike a VA purchase or VA cash-out, the IRRRL does not require current occupancy. You only have to certify that you previously occupied the home as your primary residence. This is why veterans who PCS’d and turned their VA home into a rental can still IRRRL when rates drop.

Can I close a VA IRRRL in 14 days?

Yes, in many cases. With no appraisal required, streamlined credit review, no income verification, and minimal documentation, the IRRRL can close in as little as 14 days when the borrower is responsive and the loan officer pushes the file. Slower closings usually come from title delays or borrower documentation lags, not the IRRRL process itself.

Is there a funding fee on a VA IRRRL?

Yes — 0.50% of the new loan amount. This is one of the lowest funding fees the VA charges. Veterans exempt from the funding fee (disabled, surviving spouse) still don’t pay it on the IRRRL. The fee rolls into the new loan.

What is a VA cash-out refinance?

A VA cash-out refinance lets a veteran pull cash from their home equity, refinance their first mortgage into a new VA loan, or both. Unlike the IRRRL, the cash-out is not limited to refinancing an existing VA loan. You can convert a conventional, FHA, or USDA loan into a VA cash-out loan and pull cash at the same time. Maximum LTV is set by VA and lender policy, typically up to 90% LTV with full underwriting required.

Can I refinance a non-VA loan into a VA loan?

Yes, through the VA cash-out refinance. The cash-out version lets you refinance a conventional, FHA, or USDA loan into a VA loan with or without taking actual cash out. This is a powerful way for veterans to eliminate monthly mortgage insurance (PMI or MIP) on their current loan by switching to the VA program. Note: a VA IRRRL cannot be used for this — IRRRL is VA-to-VA only.

What’s the maximum LTV on a VA cash-out?

VA policy allows up to 100% LTV on a cash-out, but most lenders cap at 90% LTV for risk reasons. The exact ceiling depends on credit, loan amount, and lender policy. Higher LTVs are possible with strong files. We’ll quote your specific scenario at intake.

What is the Net Tangible Benefit (NTB) on a VA cash-out?

NTB is a VA requirement that the new loan must benefit the veteran in a real, documentable way. Common qualifying NTBs: lower rate, lower payment, shorter term, switching from ARM to fixed, eliminating mortgage insurance, or pulling cash for a specific need. The lender certifies the NTB at closing. This rule exists to prevent predatory refinancing that doesn’t help the veteran.

Are there seasoning rules on a VA cash-out?

Yes. Per VA rules (Type II cash-out): at least 6 monthly payments made AND 210 days passed since the first payment due date on the loan being refinanced. This applies whether you’re refinancing a VA loan or a non-VA loan into a VA cash-out.

Why are VA cash-out refinances different in Texas?

Texas has its own state-level home equity rules under Section 50(a)(6) of the Texas constitution. Texas restricts cash-out refinances on a primary residence in ways no other state does, including specific notice requirements, fee caps, and waiting periods. Veterans in Texas can still do a VA cash-out, but the file follows Texas 50(a)(6) rules in addition to VA rules. Texas veterans who only want a rate-and-term refinance (no actual cash to borrower) face fewer restrictions.

What’s the funding fee on a VA cash-out?

2.15% on first-time use, 3.30% on subsequent use. Disabled veterans are exempt. The fee rolls into the new loan.

Do I have to live in the home with a VA loan?

Yes. The VA loan is for primary residences only — you must occupy the home as your principal residence within 60 days of closing in most cases. The VA does allow some flexibility: active-duty service members can have a spouse satisfy occupancy on their behalf, and certain deployment or PCS situations allow extended occupancy timelines. Pure rental properties and second homes are not eligible for VA loans.

What if I get PCS orders after closing?

You can typically convert the home to a rental property after PCS without issue. The VA understands military moves and doesn’t penalize service members for them. Active-duty service members also have protections under the Servicemembers Civil Relief Act (SCRA) that can apply to mortgage interest rates and other consumer obligations during periods of active duty. If you’re PCSing soon and want to use your VA benefit again at the new station, talk to us before contracting on either home — the order of operations and entitlement math matter.

Can I keep my home and use my VA benefit again on a new home?

Often yes. The VA loan benefit is reusable. If you have remaining entitlement, you can buy a new primary residence with a VA loan while keeping your current home as a rental or in another role. PCS orders, an unintended permanent move, or buying up to a larger family home are common qualifying scenarios. The math depends on entitlement remaining, county loan limits, and whether you can document the new home as a primary residence.

What is the VA departure residence rule?

When you keep your current home (the “departure” home) as a rental and use VA on a new primary, the underwriter looks at the departure home’s equity and rental income. With at least 25% equity in the departure home and a documented lease, the rental income can offset the departure mortgage payment for qualifying on the new VA loan. With less than 25% equity, the departure payment usually has to be counted in your DTI on the new loan.

Can I use the BAH from my new duty station to qualify?

Yes, when you’re PCSing and buying at the new station. The lender uses the BAH rate for the new duty station ZIP code to qualify you for the new home. Your PCS orders or assignment notification document the move. This is one of the cleanest income approaches for active-duty buyers and it’s a place we routinely outperform lenders who don’t understand the rule.

How long do I have to occupy the home after closing?

The VA expects continuous occupancy for at least 1 year in most cases. Genuine life changes (PCS, job relocation, marriage, divorce) can shorten that. You don’t need to seek permission to move out after a real life change — but document the reason in case it ever comes up.

Is the VA loan available in my state?

Yes — in 49 states. We lend in 49 states. New York is excluded. Some states (Texas, Colorado, Florida) have additional state-level rules layered on top of VA guidelines, but the VA program itself works in every state. Your local VA Regional Loan Center oversees the program for your area.

What are the Texas VA loan rules?

Texas has unique cash-out rules under Section 50(a)(6) — additional notice requirements, fee caps, and waiting periods on primary residence cash-out refinances. VA purchases and VA IRRRLs in Texas work the same as any other state. Texas also has its own state-funded veteran loan program (Texas Veterans Land Board), which is separate from but can complement the federal VA loan.

What state-level benefits and resources are available to veterans?

Many states offer property tax reductions, additional home loan programs, education benefits, and other state-funded resources to qualifying veterans. The VA maintains a directory of every state veterans affairs office — start there for state-specific benefits in addition to the federal VA loan. Examples: Texas, Florida, Colorado, and most other states offer property tax exemptions for permanently and totally disabled veterans on their primary residence.

Why isn’t the VA loan available in New York?

The VA loan IS available in New York — but we’re not currently licensed to lend in New York. Veterans in New York can use a different VA-approved lender. The rest of our products are available in 49 states with New York excluded.

No SSN required. Takes about 2 minutes.

Step 1: Start the intake.

Fill out the short intake form. No SSN. No hard credit pull. About 2 minutes. We use this to figure out the right loan path before we ever talk numbers.

Step 2: Pre-qualification call.

We talk through your situation, pull your COE, and run the rough numbers. You leave the call knowing what loan size you can support, what your monthly payment will look like, and what’s needed to move to formal pre-approval.

Step 3: Formal pre-approval.

You submit income documentation (pay stubs, W-2s or tax returns, bank statements, leave and earnings statement (LES) if active duty). We run a credit pull and submit to automated underwriting. You get a pre-approval letter showing the max loan you qualify for — your real estate agent uses this to write offers.

Step 4: House hunt & contract.

Find your home. Your agent writes the offer. The contract goes in with the VA Escape Clause built in (federally required). When the offer is accepted, the file moves into full processing.

Step 5: Appraisal & inspection.

The lender orders the VA appraisal. You schedule your own home inspection (separate from the VA appraisal — the inspection is for your protection). The appraisal checks value and VA Minimum Property Requirements (MPRs). Termite/WDO and well/septic checks happen here if needed.

Step 6: Underwriting.

Underwriter reviews the full file — income, assets, credit, property, title. Conditions come back (request for letters of explanation, updated docs, etc.). You provide what’s asked. Once all conditions clear, the file is “clear to close.”

Step 7: Closing disclosure.

You get the Closing Disclosure (CD) at least 3 business days before closing. This shows your final loan terms, monthly payment, and cash to close. Review it carefully. Differences from the original Loan Estimate are normal but should be small.

Step 8: Closing day.

You sign at the title company or attorney’s office (varies by state). Funds wire. The deed records. You get the keys. Total time from contract to keys for a clean file: 21–30 days. VA IRRRLs can close faster — sometimes as little as 14 days.

Who services my VA loan after closing?

The servicer collects your monthly payments and handles your escrow account for taxes and insurance. PRMG sometimes retains servicing; in other cases the loan is transferred to a sub-servicer shortly after closing. You’ll get a written transfer notice if the servicer changes — the loan terms don’t change, only who collects the payment.

Can I refinance my VA loan later?

Yes. Once you’ve made 6 monthly payments and 210 days have passed since your first payment due date, you can refinance — either through a VA IRRRL (if rates dropped) or a VA cash-out (for cash or to lower payment). You can do this multiple times over the life of homeownership.

What if I have trouble making payments?

Call the servicer immediately — don’t wait until you’re 60 days behind. The VA has servicer-side programs for veterans facing hardship: forbearance, repayment plans, loan modifications, and short-term assistance options described on the VA’s trouble making payments resource page. You can also reach a VA loan technician directly at 877-827-3702 for personalized support, or get help from a HUD-approved housing counselor. Don’t ignore the problem — it always gets worse.

What are VA loan modification options?

Loan modification permanently changes the terms of your loan — usually extending the term, lowering the rate, or rolling missed payments into the balance — to lower your monthly payment. Modifications are handled by the servicer with VA approval. They typically require documentation of a hardship and proof you can sustain the new payment.

What are VA loan reinstatement options for delinquent borrowers?

If you’ve fallen behind, reinstatement means catching up the past-due amount and returning the loan to current status. Options include lump-sum reinstatement (full past-due payment), repayment plans (catch up over 3–12 months while making current payments), or a VA loan modification that rolls the past-due amount into the loan balance.

Can I pay off my VA loan early?

Yes, with no prepayment penalty. The VA does not allow prepayment penalties on VA loans. You can pay extra principal monthly, send lump sums, or refinance into a shorter term to pay the loan off faster. Once paid off, you restore your VA entitlement and can use the benefit again on a new home.

No SSN required. Takes about 2 minutes.

About this guide: Written by J.D. Peck, NMLS #314883, Area Manager and Mortgage Loan Originator at Paramount Residential Mortgage Group (PRMG), NMLS #75243. 25+ years of mortgage lending experience, 3,100+ loans closed, Scotsman Guide Top Originator 2026. Specialties: VA loans, manual underwriting, Non-QM products, and military PCS scenarios. Every answer above is built from the VA Home Loan Guaranty program guidance and 25+ years of closing VA files — purchase, IRRRL, cash-out, and the manual-underwriting files most lenders won’t touch. Guidelines, fees, and limits are subject to change. Lending in 49 states. New York excluded. Last updated May 29, 2026.