VA Loans FAQ

What “No Overlays” Means

An overlay is a credit rule a lender adds on top of VA’s. We don’t add them — we underwrite to VA guidelines. Separate from underwriting, every VA loan must also be eligible for sale or securitization, and Ginnie Mae sets pooling requirements that apply to all lenders and that no lender can waive. Refinances in particular carry seasoning requirements under Ginnie Mae that are broader than VA’s. We’ll tell you upfront if one applies to you.

As of Q3 2026 (September 2026): VA sets no minimum credit score. Any score floor is an extra rule a lender adds (VA Pamphlet 26-7, Ch. 4; 38 CFR 36.4340). VA uses 41% as a check point, not a limit, for how much of your monthly income goes to debt payments (your debt-to-income ratio). Above 41%, we take a closer look, unless the money left over each month after your bills is at least 20% above VA’s chart. If not, a supervisor can still approve the loan with a signed note listing your strengths (VA Pamphlet 26-7, Ch. 4). With full entitlement (your full VA home loan benefit), there is no VA loan limit. VA asks for no down payment in most cases, but if the price is above VA’s value for the home, you pay the difference in cash. If part of your benefit is still in use (partial entitlement), it is measured against your county’s 2026 loan limit: $832,750 in most counties and higher in some high-cost counties (VA.gov; FHFA, November 25, 2025). The funding fee (a one-time VA fee) is 2.15% on a first-use purchase with less than 5% down and 3.3% on later use with less than 5% down. On an IRRRL (VA’s refinance to lower your rate), it is 0.5% (VA.gov, effective April 7, 2023).

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 get your benefit back after you sell a VA-financed home, pay off the loan, and ask the VA. Or, in some cases, you can keep your first VA home and use the benefit you have left to buy another home you will live in. A VA loan cannot be used for a vacation home. Veterans we work with have used the VA benefit two, three, even four times over their lives.

No SSN required. No credit pull. 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 of active service in a row, or the full period they were called up for. Reservists and Guard generally need 6 years. A surviving spouse may also qualify if the service member died on active duty or from a cause linked to service. You must not have remarried, unless you remarried at age 57 or older and on or after December 16, 2003. Only VA decides.

How much service time do I need?

If you joined after September 7, 1980 (officers after October 16, 1981), you generally need 24 months in a row on active duty. If you were called up for a shorter time, you need the full time you were called for, and at least 90 days. Earlier service: 90 days with any part in wartime, or 181 days in a row in peacetime. VA counts all service since August 2, 1990 as wartime. Reserves and National Guard: 6 years in drilling status, with some exceptions for activation. Only VA decides. Your Certificate of Eligibility (COE) is the VA paper that shows you qualify. If it comes back eligible, you’re in.

Are surviving spouses eligible?

Yes, in some cases, and only VA decides. One: the service member died on active duty. Two: the Veteran died from a cause linked to service. Three: the death was not linked to service, but the Veteran was rated totally disabled for the 10 years before death. At least 5 years from leaving service to death also counts, or 1 year for a former prisoner of war who died after September 30, 1999. In each case, you must not have remarried. For the first two, remarrying at 57 or older and on or after December 16, 2003 is OK. The spouse of a service member missing in action or a prisoner of war for at least 90 days may also qualify once. Only the first two groups skip the VA funding fee (a fee paid to VA).

Does a dishonorable discharge disqualify me?

Usually, but not always. A dishonorable discharge from a general court-martial is a legal bar to VA benefits, including the home loan. But that bar has exceptions. If you had an earlier period of service that ended honorably, you can qualify on that period. If the VA finds you were not of sound mind when the offense happened, the bar does not apply. And a discharge can be upgraded through your branch’s Discharge Review Board or Board for Correction of Military Records. VA reviews other than honorable discharges, and bad conduct discharges from a special court-martial, case by case. For most veterans, an honorable or general (under honorable conditions) discharge meets VA’s test. One exception: if you qualify only through 6 years in the Guard or Reserve, your discharge must be honorable. A general discharge does not count on that path. We take these files. Do not assume you are out until the VA says so.

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. A VA loan has no monthly mortgage insurance. Not ever. This is one of the program’s biggest advantages over FHA loans and low-down-payment conventional loans. Instead, VA charges a one-time funding fee when your loan closes. You can add it to your loan. You pay no funding fee at all if VA pays you disability pay for a condition tied to your service.

Are VA loan rates lower?

In most markets, yes. VA rates typically run 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 go to manual underwriting, where a person reads the whole file. Late payments in the last 12 months do not end it, on any account and not just your mortgage, as long as there were extenuating circumstances and you have re-established a clean payment record, or the late was an isolated incident.

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

Yes, if the rest of the file supports it. A 500 score goes to manual underwriting with strong residual income and usually compensating factors like cash reserves or steady employment. Late payments in the last 12 months, on any account, do not automatically stop it. We can work with them when there were extenuating circumstances and you have re-established a clean payment record, or when the late was an isolated incident. 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 we need 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. Chapter 7: usually 2 years from the discharge date to your closing date. Between 1 and 2 years can work if you have both: new credit paid on time since, and proof the bankruptcy came from something you could not control, like a job loss. Chapter 13: you may not have to wait for the plan to end. You need at least 12 months of on-time plan payments and an okay from the trustee or judge for the new loan. VA’s guide gives no shorter path for Chapter 13, even for hardship. Either way, a good payment record since the bankruptcy is key.

Can I get a VA loan after a Chapter 7 bankruptcy?

Yes. The clock runs from your discharge date to your closing date, not from the day you filed. Two years is the usual wait. After that, we look for rebuilt credit, like a few accounts paid on time since. Between 1 and 2 years, you need two things. First, proof the bankruptcy came from something you could not control, like a job loss or medical bills insurance did not pay. Second, new credit that you have paid on time since. Under 1 year is usually too soon. A person reviews that file by hand instead of a computer.

Can I get a VA loan during or after a Chapter 13 bankruptcy?

Yes, and you do not have to wait for the case to close. After 12 months of on-time plan payments, we can move forward while the Chapter 13 is still open. You will need written permission from the trustee or the court to take on the new mortgage. Your payment record inside the plan is the part that matters most. A real underwriter reads the whole file, not just a score.

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?

These are events you could not control that caused a credit problem. VA’s credit rules do not use the term “extenuating circumstances.” VA’s words are “circumstances beyond the control of the borrower.” VA’s examples are a job loss, long strikes, and medical bills insurance did not pay. Other events, like disaster damage to your old home, may also fit. Poor money habits over time do not count. For a bankruptcy, a divorce usually does not count as out of your control. To qualify 1 to 2 years after a Chapter 7 bankruptcy or a foreclosure, you need two things. First, proof it came from something you could not control. Second, new credit that you have paid on time since.

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. We have to be able to read the story and see that it makes sense.

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

It depends on timing. A Chapter 7 discharged more than 2 years before closing can be set aside, whatever caused it. Between 1 and 2 years, you need two things: proof the bankruptcy came from something you could not control, and new credit paid on time since. For a bankruptcy, VA says a divorce usually does not count as out of your control. For a foreclosure or short sale, VA’s rules do not say either way about divorce. In every case, strong credit since the event is key. Bring the divorce decree and proof your finances settled after.

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. We need 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.

What is a VA compromise sale?

A compromise sale is a short sale on a VA loan where VA agrees to cover the gap between the sale price and the loan balance. For a new VA loan, VA’s short sale rule applies. If your payments were on time before the sale and you worked with your loan company, you may not have to wait at all. If you fell behind first, VA looks at it much like a foreclosure: usually 2 years from the date the home was transferred. Between 1 and 2 years can work with new credit paid on time since and proof the cause was out of your control. The amount VA paid stays charged against your entitlement (the amount VA will back for you) until you repay it. So you may need to buy with the entitlement that is left. Most lenders add their own wait on top. We use the VA rule and read the file.

Can I get a VA loan with late payments?

Often yes, even though most lenders will tell you no. Late payments inside the last 12 months do not disqualify you, and this is not limited to your mortgage. It applies to any account on your credit. What matters is why they happened and what you have done since. We can approve when there were extenuating circumstances and you have re-established a clean payment record, or when the late was an isolated incident. A written explanation with documents behind it carries real weight. We review these by hand rather than letting a computer stop at the late payment, which is what most lenders do. Every file is different and this is not a guarantee, but if you were turned down somewhere else over late payments, it is worth a second look here.

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, in many cases. VA has no rule that your last 12 house payments must be perfect. If your VA loan is 30 or more days late when you do an IRRRL (a VA refinance to a lower rate), VA must approve the loan first. A VA cash-out always gets a full credit review. On a cash-out, more than one house payment 30 days late in the past year means you write a short letter, and a person reviews your file by hand. Late payments older than 12 months usually don’t block a refinance.

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

Yes. VA has no set number of late payments that stops a loan. VA looks at your overall pattern, and house payments often count the most. If you were 30 days late on a mortgage payment more than once in the past year, you explain it in writing. Then a person reviews your file by hand. That is a closer look, not a no.

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?

A court judgment must be paid off before the loan is approved. You usually need 12 on-time plan payments. If the judgment is new and you started paying right away, fewer payments can be okay. A judgment lien on your property for a debt you owe the government must be paid or settled first. If you owe back federal taxes or have a federal tax lien, you must catch up or have a payment plan the IRS agrees to. If the taxes went unpaid for years, a brand-new plan may not be enough. VA wants these debts handled so they do not hang over the new mortgage.

What income counts for a VA loan?

Steady income from any source we can prove, if it should keep coming. That includes base pay, overtime, bonus (with 2-year history), and commission. It includes self-employment, housing and food pay (BAH, BAS), retirement, and Social Security. It also includes disability, child support and alimony, and rental income. Child support, alimony, and income like a pension must be likely to last at least 3 years after closing. VA disability pay does not need proof that it will last.

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. Bank statements alone cannot take the place of tax returns on a VA loan. When tax returns don’t tell the right story, we have also helped self-employed veterans with a bank statement loan. That is a different kind of loan, not a VA loan.

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, if you can show you get it and it should keep coming for at least 3 years after closing. We look at whether there is a court order or written agreement. We also look at how long and how often you have been paid. And we look at whether the payments can be enforced. Child support is not taxed. So when we figure how much of your income goes to debt payments, we may count it at 125% of the real amount. The money left over each month still uses the real amount.

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 cutoff for gap length. Short breaks between jobs need no letter. If a person reviews your file by hand, gaps under 30 days need no explanation. If the computer review rates your file as lower risk, gaps under 60 days need none. For longer gaps, we may ask for a letter and proof of what you were doing, like school transcripts, military separation papers, or medical records. Our real question is: is your income stable now, 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. We need the timeline and a clear 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?

It depends on when your payments start. If you have written proof your payments will not start until at least 12 months after closing, VA does not count a payment. If payments are due now or start sooner, we count 5% of what you owe, divided by 12. If your credit report shows a higher payment, we use that. To use a lower payment from your payment plan, we need a statement from your loan company dated within 60 days of closing. That payment goes into how much of your monthly income goes to debt payments (your debt-to-income ratio).

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

It depends on when your payments start. If you have written proof your payments will not start until at least 12 months after closing, VA does not count a payment. If payments are due now or start sooner, we use 5% of what you owe, divided by 12. Most veterans are not told about this 5% / 12 math until they apply. Example: a $50,000 balance x 5% = $2,500 a year. Divided by 12, that is $208 a month. If your credit report shows a higher payment, like $300 a month, we use $300. If your loan is deferred but payments start within 12 months of closing, we use $208. To use a payment lower than $208, we need a statement from your loan company dated within 60 days of closing.

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

Yes. Deferment or forbearance does not stop you from getting a VA loan. If you have written proof your payments will not start until at least 12 months after closing, VA does not count a payment. If payments are due now or start sooner, we use 5% of what you owe, divided by 12. If your credit report shows a higher payment, we use that. That payment goes into how much of your monthly income goes to debt payments (your debt-to-income ratio). If it pushes that number too high for the lender, you have options. You can borrow less, pay down other debts, or get an income-based payment plan from your loan company. To use that lower payment, we need a statement from your loan company dated within 60 days of closing.

What is residual income on a VA loan?

Residual income is the money you have left each month after taxes, your house payment and upkeep, and all your debts. That money is for food, gas, and other family costs. VA publishes charts that show how much you need left over. They vary by loan size, family size, and region (Northeast, Midwest, South, West). Strong residual income can make up for a higher debt-to-income ratio (how much of your monthly income goes to debt payments). It is one of the key reasons VA loans get approved when conventional loans get turned down.

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?

It means a person reviews your file by hand instead of relying on the computer review. The computer review does not say yes or no to your loan. It only rates the risk. When it rates your file “Refer,” a person reviews it by hand. VA’s rules do not require a hand review for every recent credit problem. They list set reasons to move a file to Refer, like more than one 30-day late mortgage payment in the past year. A hand review uses VA’s own rules, like the money left over each month after your bills (VA calls this residual income), strengths in your file that offset a weak spot, and recent housing history. Computer systems don’t read these 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. We weigh them against the weak spot 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.

How does VA underwriting work?

Every VA file first goes through the computer review. It gives a risk rating, not a final yes. We still make the call. If it rates the file Approve, we document it and close. If it comes back Refer, a person reviews your file by hand against VA Pamphlet 26-7 Chapter 4. We look at your whole pattern of paying bills, including 2 years of rent or mortgage history. We look at how much of your monthly income goes to debt payments. The guideline is 41%, and it can go higher with strengths in your file that offset it. We also look at the money left over each month after your bills (VA calls this residual income), based on your family size and region. There is no VA minimum credit score. Many lenders refuse Refer files. We work them.

What is the VA funding fee?

The VA funding fee is a one-time fee paid to VA when your loan closes. It helps pay part of what the VA home loan program costs. The fee is a percentage of the loan amount. It changes with the loan type: purchase, VA streamline refinance (IRRRL), or cash-out refinance. It also depends on whether this is your first VA loan and whether you put any money down. Some Veterans do not have to pay it.

How much is the VA funding fee?

For a VA purchase with less than 5% down (including zero down): 2.15% first-time use, 3.30% subsequent use. With 5% or more down: 1.50%. With 10% or more down: 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 rates took effect April 7, 2023. Percentages can change — confirm at closing.

Who is exempt from the VA funding fee?

Five groups. One: veterans who get VA disability pay for a condition tied to service, at any rating. Two: veterans who would get that pay but take military retirement pay instead. Three: service members rated for that pay before discharge. Four: service members due that pay who do not get it because they are on active duty. Five: surviving spouses of those who died in service or from a condition tied to service. Purple Heart recipients currently on active duty are also exempt. The exemption appears on your Certificate of Eligibility (COE), VA’s record of your benefit. We check it for you.

Can the funding fee be rolled into the loan?

Yes. You can add the VA funding fee (a fee paid to VA) to your loan instead of paying it in cash. VA sets no dollar cap on the loan. On a purchase, the fee goes on top of the lower of the price or the VA value. On a cash-out refinance, the loan with the fee can’t go over the home’s VA value. 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 still open at closing, you paid the fee. If VA later grants disability pay that starts before your closing date, you can ask VA for a refund. Your lender also plays a part. The lender fixes the fee in VA’s payment system. If the fee was added to your loan, the refund lowers your loan balance instead of coming as cash. On active duty with a claim before discharge? If VA has not rated it before you close, there is no refund. 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 Certificate of Eligibility (COE), VA’s record of your home loan benefit, will usually show whether you owe the funding fee. If it does not show you as exempt, VA confirms your status on its own form. If that is not done before closing, you pay the fee, and VA refunds it if you were exempt. We handle this during your application, so most Veterans do not have to chase paperwork.

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 your whole VA home loan benefit is free to use. You have it if you never used the benefit, or if all the benefit you used was given back. There is more than one way to get it back. You can sell the home and pay off the VA loan. A Veteran buyer can take over your loan and swap in the same amount of their own benefit. Or you can pay off the VA loan, keep the home, and get it back one time to buy a different home. If a past VA loan ended in a loss, that loss must be repaid first. The benefit does not come back on its own. You ask VA, and your lender can send the request. Partial entitlement means part of your benefit is still tied up. You may still have a VA loan on another home. You may have an unpaid loss on a past VA loan (a short sale, foreclosure, or deed-in-lieu, which means giving the home back to the lender). Or you paid off a VA loan but have not asked for the benefit back yet. Full entitlement = no county loan limit. Partial entitlement = the FHFA county loan limit is used to figure how much of the loan VA backs.

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)?

After a prior VA loan loss, the benefit used on that loan (your entitlement) stays tied up until VA is paid back for the loss. This covers a foreclosure, short sale, or deed-in-lieu (giving the home back to the lender) where VA paid a claim to the lender. You can still get a new VA loan once VA’s timing rules are met. After a short sale or deed-in-lieu, you may not have to wait at all if you paid on time before it and worked with your loan company. Your county’s loan limit is then used to figure how much VA can still back. $0 down works up to four times that amount. On a bigger loan, a lender may ask for some money down. Once the loss is paid back to VA in full, you can ask VA to give that benefit back. We walk through the math with you case by case at the start.

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?

There are a few ways. One: sell the home with the prior VA loan and pay the loan off in full at closing. Two: let a Veteran buyer take over your VA loan and swap in the same amount of their own benefit (this is rare). Three: pay off the VA loan, keep the home, and get the benefit back one time to buy a different home. A VA cash-out refinance on the same home also counts, but only for that home. Payoff alone does not restore it. After payoff, you file a request with the VA, and your lender can send it. If you had a foreclosure or short sale loss on a prior VA loan, that loss has to be repaid before your benefit is restored.

Can two veterans combine entitlement on one VA loan?

Yes. When two veterans buy together, each can use entitlement on the same loan, and the VA guaranty is based on both. This is often called dual entitlement. A married couple who are both veterans can pool entitlement the same way. If a veteran buys with someone who is not a veteran and not their spouse, the VA only backs the veteran’s share, so a down payment on the other half is usually required. Both veterans pay a funding fee on their share unless exempt. See our dual-veteran funding fee page for the math.

Do I need a down payment for a VA loan?

No, in most cases. A VA loan can cover 100% of the VA appraised value. VA’s own down payment rule is mainly for when the price is higher than the VA value. Then you pay the gap in cash from your own money. If part of your VA benefit (your entitlement) is tied up, VA itself still does not ask for money down. But many lenders allow $0 down only up to four times what VA can still back. Above that, the lender may ask for some money down.

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 (standard on VA loans), seller-paid closing costs (no VA cap on these), and seller concessions that cover the funding fee and prepaid taxes and insurance (up to 4% of VA’s reasonable value as VA sets it). Many veterans close with zero out of pocket when the deal is set up the right way. 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 for you that go beyond normal seller-paid closing costs. VA caps them at 4% of the home’s value. That is the value on the Notice of Value, VA’s written value for the home. Concessions can pay the VA funding fee, prepay property taxes and insurance, or pay off your debt to help you qualify. They can also gift household items like appliances, or pay for points beyond the normal level. Points are a fee paid up front for a lower rate. Standard seller-paid closing costs, like title, recording, and 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, like title, recording, transfer tax, and attorney fees. No VA cap. Bucket two: seller concessions, which are extras beyond normal closing costs. These include the funding fee, prepaid taxes and insurance, debt payoff, gifted items, and points beyond the normal level. They are capped at 4% of the home’s value on the Notice of Value (VA’s written value for the home). The two buckets stack. Many veterans close with zero out of pocket by setting up both buckets the right way.

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, like title insurance, recording fees, transfer taxes, and attorney fees. No VA cap. Seller concessions (bucket two): extras beyond normal closing costs, like the funding fee, prepaid property taxes and insurance, paying off the buyer’s debt, or gifting personal property like a washer, dryer, or refrigerator. Capped at 4% of the home’s value on the Notice of Value, VA’s written value for the home.

What is the VA seller concessions guideline?

Per the VA Lender’s Handbook (Pamphlet 26-7, Chapter 8): seller concessions are limited to 4% of the home’s value. That is the value on the Notice of Value, VA’s written value for the home. Items beyond normal closing costs may count as concessions. Items VA lists under the 4% cap include the funding fee, prepaid taxes and insurance, paying off the buyer’s debts, and gifted household goods. Items NOT allowed: cash to the buyer at closing.

What is the seller required to pay on a VA loan?

Nothing. The VA does not force the seller to pay any cost. A seller can choose to pay the buyer’s closing costs, which have no VA cap, and up to 4% of VA’s reasonable value in concessions such as debt payoff, prepaid payments, or the funding fee. Sellers are not required to make repairs either, unless the appraisal flags a Minimum Property Requirement, and even then who pays is negotiable. Any listing agent who says the seller must pay VA fees is repeating an old myth.

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)?

Minimum Property Requirements are VA’s basic safety and condition rules for the home. Common items: working heat, safe wiring, no exposed or peeling lead paint, missing handrails on stairs, broken windows, holes in the roof, signs of termites, a sound foundation, working plumbing, and a working water source and sewer or septic. The home must meet these rules before VA backs the loan. Repairs can be done before closing. Or we may hold money aside so the work is done after closing. After VA sets the value, you can also ask VA to waive a repair if we agree. This should not be used for a repair that could cause a safety problem.

What is the VA Tidewater Procedure?

Tidewater is a VA step that starts when the value looks likely to come in below the contract price. Before finishing, the appraiser must tell the lender. Then there are two business days to send in up to three recent sales of similar homes that support the price. They can come from anyone in the deal the lender asks. This can save the deal when the first set of sales missed similar homes.

What happens if the VA appraisal comes in low?

You have more options than most buyers know about. First comes Tidewater. The appraiser has to tell us before a low value is final. Then there are two business days to send in recent sales that support the price. If the value still lands low, we can file a Reconsideration of Value. That asks VA to look at the value again. You can also ask the seller to drop the price, or bring the difference in cash. You do not have to lose your earnest money, because the VA Escape Clause protects it.

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?

Sometimes. It depends on where the home is and what the appraiser sees. If the appraiser sees signs of termites or rot, you need a termite report (VA calls it a wood destroying insect report). All damage must be fixed. Where VA’s termite map shows moderate to heavy or very heavy risk, you need the report even with no signs. And per VA policy, the buyer typically cannot pay for the report. The seller, lender, or another party usually covers it. We’ll confirm what your home needs when you apply.

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 more strict 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. A VA loan can pay for a new home that is already built and ready to move in. It can also pay to build a home from the ground up, with a VA construction loan that becomes your mortgage. A finished new home must pass the VA appraisal. It also needs proof it was finished and a warranty. The warranty can be a one-year builder warranty on a VA form, or a ten-year warranty backed by insurance.

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 a finished new home: it must pass the VA appraisal and VA’s basic safety and condition rules for the home. It needs proof it was finished, such as the local building office’s final approval. It also needs a warranty: a one-year builder warranty on a VA form, or a ten-year warranty backed by insurance. And it must be ready to move in. For a VA construction loan with one closing: you may pick your own builder. The plans and building details must be ones VA accepts, and we manage the payments to the builder. The appraiser values the home from the plans. When it is done, a VA appraiser comes back for a final check. It is not a new appraisal.

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 asks for termite paperwork where its termite map shows high risk. There, a newly built home needs a termite inspection report or a soil treatment guarantee. That guarantee shows the soil was treated for termites before the foundation was poured, and VA prefers it. On a home not yet built, both termite forms are needed: NPMA-99a and NPMA-99b. We give you a copy of both. Your builder usually handles it as part of the build.

What builder requirements apply to VA new construction?

For a finished new home, the builder must give you one of two warranties. One is a one-year builder warranty on a VA form. The other is a ten-year warranty backed by insurance. The home also needs proof it was finished, such as the local building office’s final approval. For a VA construction loan, the builder gives plans, building details, and a construction contract. You may pick your own builder. VA also lets you act as your own builder. If you do, you must keep receipts, work orders, or contracts for all labor and materials.

What is a VA IRRRL?

IRRRL stands for Interest Rate Reduction Refinance Loan. It is the VA streamline refinance. You can only use an IRRRL to move an existing VA loan into another VA loan. The IRRRL is built for speed. VA does not require an appraisal. In most cases, VA also does not require income papers, a check of how much of your income goes to debts, or a full credit review. That changes if your loan is 30 or more days late, or if your full house payment will go up 20% or more. The new loan must lower your rate (or move you from a rate that can change to a fixed rate). Closing costs can roll into the new loan.

Who qualifies for a VA IRRRL?

Three requirements. One: you have a VA loan on the home now. Two: you’ve made at least six monthly payments in a row, and at least 210 days have passed since your first payment due date. Three: the new loan must lower your rate (or move you from a rate that can change to a fixed rate). You also need to confirm in writing that you once lived in the home as your main home. You do not have to live there now.

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?

With an IRRRL (a VA refinance to a lower rate), your savings must pay back your costs within 36 months. Count the fees and costs you pay, whether they go into the loan or you pay them yourself, like an appraisal fee. Leave out the VA funding fee (a one-time fee paid to VA), taxes, insurance, and money set aside to pay them. Say your loan payment, not counting taxes and insurance, drops by $200 a month. Then your countable costs can be up to $7,200 ($200 x 36). This rule protects veterans from refinances that don’t actually save them money.

Can I get cash back at closing on an IRRRL?

No, an IRRRL (a VA refinance to a lower rate) is not a way to take cash out of your home. You may get a small refund at closing, like a fix for a math error, an appraisal or credit report fee you paid up front, or money left in your old loan’s account for taxes and insurance. VA sets no dollar cap on these, but above $500 we check with VA first. The loan can also pay you back up to $6,000 for energy-saving work done in the 90 days before closing. 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 use an IRRRL.

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 (such as those receiving VA disability pay, or surviving spouses receiving DIC) 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 you take cash from your home’s equity, move your first mortgage into a new VA loan, or both. Unlike the IRRRL (VA’s refinance to a lower rate), a cash-out does not have to pay off a VA loan. You can move a conventional, FHA, or USDA loan into a VA cash-out loan and take cash at the same time. VA lets the loan go up to 100% of the home’s value from the VA appraisal. The VA funding fee (a one-time fee paid to VA) must fit inside that 100%. VA requires a full review of your credit and income.

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?

The net tangible benefit is a VA rule that your new loan must give you a real benefit from VA’s list. It counts if the new loan ends mortgage insurance, cuts your term, or lowers your rate or loan payment. It also counts if you owe 90% or less of the home’s value, keep more money each month after bills, move from a rate that can change to a fixed rate, or pay off a loan used to build or fix your home. Getting cash for a need is not on the list. We give you a test that shows how the new loan helps you. This rule exists to stop harmful refinances that do not help you.

Are there seasoning rules on a VA cash-out?

Yes. If your cash-out pays off a VA loan, VA has a waiting period. If the new loan is more than you owe (Type II), VA counts 210 days from the day you made your first payment, plus 6 monthly payments. If not (Type I), count from the first payment’s due date, with 6 payments in a row. VA’s own wait does not apply to FHA, USDA, or other non-VA payoffs. But Ginnie Mae, the agency that backs the bonds VA loans are sold into, still sets one: 6 payments and 210 days from the old loan’s first payment due date.

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 later use. You pay no fee if VA pays you disability pay for a condition tied to your service. The fee can be added to the new loan, as long as the total loan stays at or under the VA appraised value of your home. Any part of the fee above that is paid at closing.

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.

Can I get a VA loan with late mortgage payments?

At most lenders, no. One late house payment in the past 12 months and the file is dead. That is a hard stop they built themselves, and it is not in the VA’s rules.

We do not use one. We look at what actually happened:

• Was it isolated? One missed payment is a different file than a pattern.
• Was there a real reason behind it? A job loss, a deployment, a medical event, a divorce, a death in the family. These are extenuating circumstances, and the VA expects them to be weighed rather than ignored.
• Have you recovered? The circumstance ended, and you got back on your feet.
• Have you re-established? Since then, you have been paying on time.

If those line up, the late payments are explained, not disqualifying. A file like this usually gets reviewed by a person rather than a computer, which is exactly what should happen, because a computer cannot read a letter explaining why the payment was missed.

We follow VA guidance and Ginnie Mae. That is it. Nothing else gets added on top.

What is the VA departure residence rule?

No lease is required. VA does not have an equity test for the home you are leaving, either. When you keep your current home and buy a new primary with a VA loan, the expected rent on the departure home is simply used to offset that home’s mortgage payment, so the payment does not count against you on the new loan. The rent cannot be added to your income. VA does not require reserves for this offset. A rule that demands 25% equity or a signed lease before the rent counts is a lender overlay, not VA policy. We underwrite to the VA rule.

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.

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. For a VA IRRRL (a refinance to a lower rate, if rates dropped), you need six monthly payments in a row, and 210 days must pass from your first payment’s due date. A VA cash-out (for cash or to lower your payment) has a similar wait, but the exact test depends on the loan you pay off and how much you borrow. You can refinance more than once while you own the home.

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 toward the loan balance each month, send lump sums, or refinance into a shorter term to pay the loan off faster. Paying off the loan does not give your VA home loan benefit back on its own. You have to ask VA to restore it, and we can send that request. Then you can use the benefit again on a new home. If you keep the old home, you can get the benefit back this way only one time. After that, you would need to sell every home you bought with a VA loan first.

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 October 9, 2026.