VA FAQ

What is a VA loan?

• A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs (VA), designed to help eligible veterans, active-duty service members, and certain military spouses purchase homes with favorable terms.

Who is eligible for a VA loan?

• Eligibility is generally extended to veterans, active-duty service members, National Guard members, reservists, and surviving spouses of veterans who died in service or as a result of a service-related injury. A Certificate of Eligibility (COE) is required to verify eligibility.

What are the advantages of a VA loan?

• Advantages include no down payment (in most cases), no private mortgage insurance (PMI) requirement, competitive interest rates, and flexible credit and income requirements.

Is a down payment required for a VA loan?

• In most cases, no down payment is required for VA loans, although lenders may have specific conditions where a down payment is beneficial or necessary for certain borrowers.

Do VA loans require mortgage insurance?

• No, VA loans do not require private mortgage insurance (PMI). However, borrowers are required to pay a one-time VA funding fee, which helps to offset the cost of the loan program to taxpayers.

What is the VA funding fee?

• The VA funding fee is a one-time fee that varies based on factors like the borrower’s military service category, the loan amount, and whether it’s the first VA loan. It typically ranges from 1.25% to 3.3% of the loan amount. Veterans with service-related disabilities may be exempt from paying the funding fee.

What are the credit score requirements for a VA loan?

• The VA does not set a minimum credit score, but most lenders require a score of at least 620. Some lenders may be willing to work with lower credit scores depending on the borrower’s financial profile.

Can I use a VA loan to purchase a second home or investment property?

• No, VA loans are intended for primary residences only. You must live in the home you purchase with a VA loan. However, you can use a VA loan to buy a multi-family property (up to 4 units) if you live in one of the units.

Can I have more than one VA loan at the same time?

• Yes, it is possible to have more than one VA loan at a time if you have remaining entitlement. This typically occurs when a borrower sells a home with a VA loan and wants to purchase a new home using the VA benefit again.

What are the loan limits for VA loans?

• VA loans do not technically have limits, but there are limits to how much the VA will guarantee without a down payment. These limits vary by county, and loans above these limits may require a down payment.

Can I refinance a VA loan?

• Yes, there are two primary refinancing options for VA loans: the VA Interest Rate Reduction Refinance Loan (IRRRL) to lower interest rates and streamline the refinancing process, and the VA cash-out refinance to access home equity.

What is the debt-to-income (DTI) ratio requirement for a VA loan?

• The VA generally recommends a DTI ratio of 50% or lower, but exceptions can be made based on the borrower’s credit score, residual income, and overall financial health. Residual income is the VA’s number one requirement, so you can have DTI as high as 57%.