Military service to your country is rewarded with an exclusive benefit to foster homeownership. A VA loan is unlike any other mortgage on the market, offering a home loan with no down payment, limited closing costs, and no private mortgage insurance. However, VA loans are offered only to those who have served in the military and to eligible surviving spouses.
It’s a well-deserved and valuable advantage to maximize home affordability, especially for a first-time home buyer. This is how the program works and what it takes to qualify for a VA home loan in 2025.
Read more: What are government home loans?
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VA loans are issued by a wide array of lenders, including banks, credit unions, or mortgage providers, but are administered by the Department of Veterans Affairs, which guarantees a portion of the loan. That guarantee gives lenders greater flexibility in structuring the loan terms used to finance the purchase of a single-family home, condominium, multi-unit property, manufactured home, or new construction.
Current service members, veterans, and eligible surviving spouses may qualify for a VA loan.
Learn more: 12 popular types of houses
Around 90% of VA loan borrowers don’t put any money down. How? Well, the VA doesn’t require a down payment, but lenders can add loan requirements to manage their credit risk. It’s the same with credit scores: The VA doesn’t set a minimum qualifying credit score for a home loan, but lenders often do.
Tip: These “lender overlays” — qualifying requirements beyond those specified by a guarantor — are a primary reason for borrowers to shop multiple lenders. According to the CFPB, borrowers could save $100 a month or more by shopping for the best mortgage deal.
Generally, the benefits of a VA loan for a borrower with full entitlement include:
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While mortgage rates change daily, VA home loans tend to have lower interest rates than conventional mortgages. For example, according to Mortgage News Daily data, the average interest rate on a 30-year fixed-rate VA loan in March 2025 was 6.22%, while the rate on a 30-year conventional loan was 6.79%. Your rate may be higher or lower depending on your creditworthiness and finances.
Keep learning: How to earn the lowest mortgage rates
One cost unique to a VA loan that shouldn’t be overlooked is the VA funding fee. It is not insignificant and can blindside a borrower.
The VA funding fee is typically 1.25% to 2.15% of the loan amount for the first-time use of a purchase loan. It can be paid in cash at closing, financed as part of the loan, or paid by the lender or home seller as a concession.
There can be exemptions for the payment of the funding fee, including for certain veterans with a service-connected disability and some unremarried surviving spouses of veterans.
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Lenders may stipulate how much you can borrow, but the VA does not have specified loan limits for borrowers with a full entitlement. And while there is no minimum income requirement, the VA needs proof that you will have “income remaining after paying your mortgage and other financial obligations.”
The home being financed must be your primary residence, and you must meet one of the following:
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An active-duty service member. The minimum active-duty-service requirements depend on when you served.
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A veteran of the armed forces, including Reserve and National Guard members.
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An eligible spouse.
There are quite a few qualifiers to the above standards. Here is a complete list of service requirements. Even if it seems you don’t meet the minimum service requirements, examine the details of active-service and veteran qualifications.
Particular circumstances of a discharge can also qualify you for a VA loan.
You will need to provide proof of your qualifications for a VA mortgage. That is supplied with a Certificate of Eligibility. Approved VA lenders will have access to an online tool that can provide the information within minutes. You can also get a COE online at VA.gov or submit a VA Form 26-1880 via mail.
Keep learning: What is a VA Certificate of Eligibility, and how do you get one?
Specific loan-eligibility requirements vary by lender, but generally, VA loans require a borrower to:
Meet a minimum credit score requirement. The VA does not set this, and it varies by lender. While FICO 620 is often mentioned as the preferred entry-level credit score, Yahoo Finance found minimum credit scores at a sampling of major VA lenders to be 550, 580, and 620.
Fall within certain debt-to-income limits. The VA also doesn’t mandate a maximum debt-to-income ratio, but lenders often look for a DTI of less than 50%.
Read more: The best VA loan lenders
Keep reading: What is an assumable mortgage, and how do you get one?
If you already have a VA loan or want to convert your conventional loan to a VA mortgage, the VA’s cash-out refinance could be for you. With this refinancing option, you can either keep or convert to a VA loan and pull equity out of your home in the form of cash.
With a VA cash-out refi, you’ll still be subject to the VA funding fee. If your original mortgage is a VA loan, you’ll pay a higher VA funding fee — 3.3%. If you convert a conventional loan to a VA mortgage and haven’t previously used your VA loan benefit, your funding fee is 2.15%.
The one catch to be aware of with the VA’s cash-out refinance option is that it’s only available for primary residences.
Learn more: How a VA cash-out refinance works
The VA Interest Rate Reduction Refinance Loan — or VA IRRRL (“earl”) for short — skips the cash-out and simply refinances your existing VA loan into one with a lower interest rate. It’s also called a VA streamline refinance.
These refinance loans skip a lot of the hoops involved in other refinance loans. With the VA streamline refinance, you’ll enjoy no credit check, income verification, or appraisal. There is a VA funding fee, but it’s only 0.50%, and you can roll the funding fee and closing costs into your new mortgage. Many borrowers see their loans closed in as little as 10 days.
To qualify for a VA streamline refinance, you must have six months of consecutive payments on your original VA loan under your belt and wait at least 210 days since you made your first VA mortgage payment. You’ll also need to be current on your mortgage payments.
A big plus for the VA IRRRL refinance option is that you can use it to refinance primary and secondary residences. The home must be your primary residence initially, but once you’ve closed on the VA IRRRL, you’re free to use it as a second home and even rent out the space.
Dig deeper: How does a VA streamline refinance (VA IRRRL) work?
What is a VA loan, and how does it work?
A VA loan is a mortgage backed by the Veterans Administration and available to qualifying servicemembers, veterans, and some surviving spouses. VA loan borrowers enjoy many perks, including zero-down payments, no private mortgage insurance (PMI), and lower interest rates than conventional mortgages. Most VA loan borrowers must pay a VA funding fee that ranges from 1.25% to 2.15% of the loan value. However, borrowers have the option of rolling the funding fee and other closing costs into their mortgage to enjoy a true “zero-down” mortgage.
The main disadvantages of a VA loan are eligibility and the VA funding fee requirement. These loans are only available to qualifying service members, veterans, and some surviving spouses who can present the required Certificate of Eligibility (COE) issued by the VA. Most VA borrowers must also pay the VA funding fee, which ranges from 1.25% to 2.15% of the total loan for a first-time VA loan borrower, though some veterans may qualify for a funding fee waiver.
The 1% rule on a VA loan states that a lender may only charge a VA borrower a maximum loan origination fee of 1% of the loan’s value. For VA IRRRL borrowers, the origination fee can only be assessed based on the balance of the existing VA loan.
This article was edited by Laura Grace Tarpley.
