To apply for a VA home loan, you first confirm that your service qualifies, then get a Certificate of Eligibility (COE) online, through a VA-approved lender or by mail, and then apply with a lender that makes VA loans. If you have full entitlement, there is no VA loan limit and usually no down payment, and you never pay monthly mortgage insurance. Most borrowers pay a one-time funding fee of 1.25% to 3.3% of the loan, and veterans who receive VA disability compensation are generally exempt.
This guide covers who qualifies, how entitlement works, the funding fee, the residual income test that VA lenders use, and what the loan costs next to FHA and conventional options.
Key takeaways
- Most veterans who served since August 2, 1990 qualify with 24 continuous months of active duty, or at least 90 days if called to active duty for a shorter period (VA, as of October 2026).
- With full entitlement, VA sets no loan limit for loans closed on or after January 1, 2020; your lender still decides how much you can afford.
- The funding fee for a no-down-payment purchase is 2.15% on first use and 3.3% after that. Putting 5% down cuts it to 1.5%; 10% down cuts it to 1.25%.
- On a $350,000 home in our example, the VA payment is $60.85 a month lower than FHA and $44.95 lower than a 3%-down conventional loan, with no money down.
- VA underwriters look at residual income, the cash left each month after major expenses, not just your debt-to-income ratio.
Who is eligible
Eligibility depends on when and how you served. According to VA’s eligibility page (updated September 2026), the main paths are:
- Veterans who served on or after August 2, 1990: 24 continuous months of active duty, or the full period you were called or ordered to serve (at least 90 days). Shorter service can count if you were discharged for a service-connected disability or certain other qualifying reasons.
- Current service members: 90 continuous days of active duty.
- National Guard and Reserve: 90 days of non-training active duty, or six creditable years of service if you are still serving or were discharged honorably or retired. Guard members can also qualify with 90 days of activation that includes 30 consecutive days under specific Title 32 orders.
- Surviving spouses: generally those who receive or qualify for Dependency and Indemnity Compensation, and spouses of service members who are missing in action or held as prisoners of war.
Earlier service periods have their own minimums, often 90 or 181 days. A discharge that is other than honorable may block eligibility, but VA reviews the character of service case by case and you can request an upgrade.
Get your Certificate of Eligibility
The COE shows lenders that you qualify and how much entitlement you have available. VA lists three ways to get one:
- Through your lender. Most VA lenders can pull your COE in minutes through VA’s online system. This is usually the fastest route.
- Online through VA. Sign in and request it yourself, then share the PDF with lenders.
- By mail with VA Form 26-1880. This takes longer.
Have your documents ready. Veterans usually need a DD214. Active-duty members need a signed statement of service from their command. Guard and Reserve members need discharge papers, retirement points statements or activation orders, depending on their history. Surviving spouses use VA Form 26-1817 if they receive Dependency and Indemnity Compensation, or other forms if they do not.
Entitlement and loan limits
Entitlement is the amount VA guarantees to the lender if the loan goes bad. For loans over $144,000, the guaranty for a borrower with full entitlement is 25% of the loan amount, with no cap. That change came from the Blue Water Navy Vietnam Veterans Act of 2019, which VA applied to loans closed on or after January 1, 2020. Before then, county loan limits applied to everyone.
You have full entitlement if you have never used the benefit, or if you used it and either repaid the loan in full and sold the home, or had entitlement restored. If part of your entitlement is still tied up in an existing VA loan, limits come back: VA calculates your remaining entitlement as 25% of your county’s conforming loan limit minus the entitlement already used. The 2026 baseline conforming limit is $832,750 for a one-unit home in most counties, per the Federal Housing Finance Agency. Lenders typically want your remaining entitlement plus any down payment to cover 25% of the loan.
No VA loan limit doesn’t mean unlimited borrowing. You still need income, credit and residual income that support the payment, and the loan can’t exceed the appraised value or the purchase price, whichever is lower.
The VA funding fee
The funding fee is a one-time charge that helps fund the program. You can pay it at closing or add it to the loan. The rates below are from VA’s funding fee page, effective April 7, 2023, and still current as of October 2026.
| Loan type and down payment | First use | After first use |
|---|---|---|
| Purchase or construction, less than 5% down | 2.15% | 3.3% |
| Purchase or construction, 5% to under 10% down | 1.5% | 1.5% |
| Purchase or construction, 10% or more down | 1.25% | 1.25% |
| Cash-out refinance | 2.15% | 3.3% |
| Interest rate reduction refinance (IRRRL) | 0.5% | 0.5% |
Who doesn’t pay the funding fee
You generally don’t pay the fee if you receive VA compensation for a service-connected disability, would receive it if you weren’t getting retirement or active-duty pay, are a surviving spouse receiving Dependency and Indemnity Compensation, have a proposed or memorandum rating before closing showing you are eligible for compensation, or are on active duty and show proof of a Purple Heart on or before closing. If a disability claim is pending, tell your lender. VA may refund the fee if you are later awarded compensation with an effective date before your closing date.
How VA lenders judge income: DTI and residual income
VA uses two tests, described in its underwriting regulation, 38 CFR 36.4340. The first is the familiar debt-to-income ratio, with 41% as the benchmark. A higher ratio is allowed, but it needs a written justification unless your residual income beats the guideline by at least 20%.
The second test is residual income: what is left of your take-home pay each month after the new housing payment, maintenance and utilities, other debts, child care and taxes. VA sets minimums by region and household size. For loans of $80,000 or more:
| Household size | Northeast | Midwest | South | West |
|---|---|---|---|---|
| 1 | $450 | $441 | $441 | $491 |
| 2 | $755 | $738 | $738 | $823 |
| 3 | $909 | $889 | $889 | $990 |
| 4 | $1,025 | $1,003 | $1,003 | $1,117 |
| 5 | $1,062 | $1,039 | $1,039 | $1,158 |
Here is how a lender might run it for a family of four in the South buying with the VA loan in the example below. Every input except the guideline is an assumption for illustration: take-home pay of $7,200 a month, a principal-and-interest payment of $2,475.43 plus $550 for property tax and insurance, $400 for maintenance and utilities, $650 of other debt payments and $900 of child care. That leaves $2,224.57, well above the $1,003 minimum and above the $1,203.60 level that is 120% of it. On gross pay of $9,500, the same household’s DTI is 38.7%.
Residual income is why VA loans have a reputation for being both flexible and careful. A borrower with a higher DTI but plenty of leftover cash can be approved, while one who technically fits the ratio but has little left over may not be.
Worked example: VA vs. FHA and conventional
Inputs: a $350,000 home, 30-year fixed loans, and the same 7.40% rate for every loan, the Freddie Mac PMMS average for the week of October 15, 2026. PMMS tracks conventional loans, so using it for VA and FHA is an assumption; government-backed loans often price differently. The conventional loan’s 0.60% PMI rate is also an assumption, since PMI is priced mainly by credit score. Fees are financed, and taxes, insurance and closing costs are left out. For the FHA rules used here, see how to qualify for an FHA loan.
| Loan | Cash down | Loan amount | First-month payment (incl. MI) | Interest + mortgage insurance, first 10 years | Balance after 10 years |
|---|---|---|---|---|---|
| VA, 0% down, first use (2.15% fee) | $0 | $357,525.00 | $2,475.43 | $249,153.12 | $309,626.52 |
| VA, 0% down, subsequent use (3.3% fee) | $0 | $361,550.00 | $2,503.30 | $251,957.95 | $313,111.95 |
| VA, 0% down, fee-exempt | $0 | $350,000.00 | $2,423.33 | $243,909.00 | $303,109.40 |
| VA, 5% down, first use (1.5% fee) | $17,500.00 | $337,487.50 | $2,336.70 | $235,189.08 | $292,272.58 |
| FHA, 3.5% down | $12,250.00 | $343,660.63 | $2,536.28 | $257,290.97 | $297,618.84 |
| Conventional, 3% down, PMI 0.60% (assumed) | $10,500.00 | $339,500.00 | $2,520.38 | $256,961.74 | $294,016.14 |
The VA loan has the lowest monthly payment of the no- or low-down options even though the borrower puts nothing down and finances the fee, because there is no monthly mortgage insurance. Over 10 years, interest and mortgage insurance on the first-use VA loan come to $8,137.85 less than FHA and $7,808.62 less than conventional.
The trade-off shows in the last column. With nothing down and the fee rolled in, the VA borrower owes more after 10 years than the FHA or conventional borrower, so there is less equity if home prices fall or you need to sell early. Being exempt from the fee saves $52.10 a month in this example.
Steps to apply
- Confirm your eligibility and request your COE, or ask a lender to pull it.
- Check your credit reports and scores. VA doesn’t set a minimum score, but lenders do, and better scores still get better pricing. See how to raise your credit score before buying a home.
- Get Loan Estimates from at least three VA lenders on the same day and compare rates, points and lender fees. VA limits some fees lenders can charge you, so question any long list of extras.
- Get preapproved, then make an offer. VA purchase contracts include a clause that lets you walk away without losing your deposit if the home appraises below the price.
- The lender orders a VA appraisal, which checks value and minimum property requirements for safety and soundness. Required repairs must be finished before closing.
- Lock your rate when you are comfortable with the terms; see how to lock in a mortgage rate.
- Complete underwriting, review your Closing Disclosure at least three business days before closing, and close. You must intend to live in the home.
When a VA loan may not be the best choice
- You plan to buy again soon with a VA loan. Keeping entitlement tied up in a home you rent out can limit your next VA purchase in an expensive county.
- You are making a large down payment and pay the subsequent-use fee. With 20% down, a conventional loan has no PMI and no funding fee. Compare the 1.25% fee against any rate difference.
- You may need to sell within a few years. Zero down plus a financed fee leaves thin equity. Selling costs could exceed it if prices are flat or falling.
- The property needs major repairs or is a second home or investment. VA loans are for primary residences that meet minimum property requirements.
- The payment fits the lender’s ratios but not your budget. Run your own residual income check with real numbers for child care, commuting and savings goals.
Frequently asked questions
Can I use my VA loan benefit more than once?
Yes. Entitlement can be restored after you sell the home and repay the loan, and in some cases you can have two VA loans at once if you have enough remaining entitlement. Later uses carry the higher subsequent-use funding fee unless you put 5% or more down or are exempt.
Is there a minimum credit score for a VA loan?
VA itself doesn’t set one. Lenders set their own minimums, and they vary, so if your score is low it pays to ask several lenders.
Can I roll the funding fee into the loan?
Yes. Most borrowers finance it. That avoids cash at closing but adds interest over the life of the loan, as the example shows.
Do surviving spouses pay the funding fee?
Surviving spouses who receive Dependency and Indemnity Compensation are generally exempt. Other eligible surviving spouses should ask the lender to confirm their status on the COE.
Can the seller pay my closing costs?
Yes. VA doesn’t cap seller credits for normal closing costs, but it limits other seller concessions, such as paying your funding fee or paying off your debts, to 4% of the home’s reasonable value. Negotiate this in the purchase contract.
Sources
- VA, Eligibility requirements for VA home loan programs (service minimums, updated Sep 22, 2026), accessed Oct 2026
- VA, How to request a VA home loan Certificate of Eligibility, accessed Oct 2026
- VA, VA funding fee and loan closing costs (fee table and exemptions, updated Oct 5, 2026), accessed Oct 2026
- VA, VA home loan limits (entitlement calculation), accessed Oct 2026
- VA, Purchase loan (no PMI, no down payment, occupancy), accessed Oct 2026
- VA Circular 26-19-30, Updated Guidance for Blue Water Navy Vietnam Veterans Act of 2019 (no limit for full entitlement from Jan 1, 2020), accessed Oct 2026
- eCFR, 38 CFR 36.4340, Underwriting standards (41% DTI benchmark and residual income tables), accessed Oct 2026
- FHFA, Conforming Loan Limit Values for 2026, accessed Oct 2026
- Freddie Mac, Primary Mortgage Market Survey (week of Oct 15, 2026), accessed Oct 2026
- HUD, Mortgagee Letter 2023-05 (FHA annual MIP), accessed Oct 2026
Figures are as of October 2026. This article is general education, not individualized financial, tax or legal advice.
