Last reviewed: October 2026 · By the MortgageCompass Editorial Team · How we research
A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs for eligible service members, veterans and some surviving spouses. Because the VA guarantees part of the loan, lenders can offer it with no down payment and no monthly mortgage insurance, which can save hundreds of dollars a month compared with other low down payment loans. In return, most borrowers pay a one-time funding fee.
Many eligible buyers never use the benefit because of things they have heard that are not true. Tap each card below to see what the rules actually say.
Eight myths about VA loans
Myths uncovered: 0 of 8
What a VA loan actually costs
The main extra cost is the funding fee, a one-time charge that helps pay for the program. It depends on your down payment and whether you have used the benefit before. For a first-time user, it is 2.15% of the loan with less than 5% down, 1.5% with 5% or more and 1.25% with 10% or more. After the first use, the fee with less than 5% down rises to 3.3%. The fee can be added to the loan, so you do not need the cash at closing.
Illustrative example for a first-time user buying a $350,000 home:
- No down payment: a funding fee of about $7,525, usually added to the loan.
- 5% down ($17,500): a fee of about $4,990 on a $332,500 loan.
- 10% down ($35,000): a fee of about $3,940 on a $315,000 loan.
- Exempt borrowers: $0.
You do not pay the funding fee if you receive VA compensation for a service-connected disability, or are eligible for it but receive retirement or active-duty pay instead, if you are a surviving spouse receiving Dependency and Indemnity Compensation, or if you are on active duty and provide evidence of a Purple Heart before closing. You will still have normal closing costs, such as the appraisal, title and lender fees, which the seller can agree to pay.
Who is eligible
Eligibility depends on when and how you served. Service members on active duty qualify after 90 continuous days. Most veterans who served since August 1990 need 24 continuous months or the full period they were called to active duty, with a minimum of 90 days. National Guard and Reserve members can qualify with six creditable years of service, or at least 90 days of qualifying active duty. Shorter service can count if you were discharged because of a service-connected disability or for certain other reasons. Surviving spouses may qualify if they receive certain Dependency and Indemnity Compensation, or if their spouse is missing in action or a prisoner of war. The VA’s eligibility page, linked below, lists the rules for every service period.
From eligibility to keys in four steps
- Get your Certificate of Eligibility. It proves you qualify. You can request it through VA.gov, or most VA lenders can get it for you in minutes.
- Get preapproved with a VA lender. Lenders check your credit, debts and residual income, the money left over each month after major expenses. Compare at least three, because rates and fees vary.
- Make an offer and order the VA appraisal. The appraiser checks the value and that the home meets the VA’s minimum property requirements for safety and soundness.
- Close and move in. You generally need to move in within 60 days and use the home as your main residence.
When a VA loan may not be your cheapest option
For most eligible buyers with a small down payment, a VA loan is hard to beat. But if you can put down 20% or more and have excellent credit, a conventional loan has no mortgage insurance and no funding fee, so it may cost less if you are not exempt from the fee. Run both options before you decide. Our first-time buyer program comparison includes VA loans, and our guide to conventional vs FHA loans explains how mortgage insurance changes the picture. If you already have a VA loan, an Interest Rate Reduction Refinance Loan has a funding fee of only 0.5%; see whether refinancing makes sense.
Sources
- U.S. Department of Veterans Affairs: Eligibility for VA home loan programs
- U.S. Department of Veterans Affairs: VA funding fee and loan closing costs
This guide is for informational purposes only and is not financial advice. MortgageCompass is not affiliated with the Department of Veterans Affairs. Eligibility and fees are set by the VA and may change, and lenders set their own credit requirements. Confirm your eligibility with the VA or a VA-approved lender.