VA Home Loan Program
- VA Home Loan Program Overview
- How the VA Home Loan Program Works
- VA Home Loan Program Borrower Eligibility Requirements
- VA Home Loan Entitlement
- VA Home Loan Program Borrower Qualification Requirements
- Maintenance and utilities expenses
- Social Security
- Child care expenses
- Monthly housing expense (monthly mortgage payment, property tax, homeowners insurance)
- Other monthly debt (credit card debt, auto and student loans)
- VA Residual Income RequirementsMortgage Amount Less than or Equal to $79,999
Family Size Northeast Midwest South West 1 $390 $382 $382 $425 2 $654 $641 $641 $713 3 $788 $372 $372 $859 4 $888 $868 $868 $967 5 $921 $902 $902 $1,004 Over 5 Add $75 for each additional member up to a family of sevenMortgage Amount Greater than or Equal to $80,000 Family 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 Over 5 Add $80 for each additional member up to a family of eight
VA Loan Analysis Form Instructional Video
- Use our VA MORTGAGE QUALIFICATION CALCULATOR to determine what size VA loan you can afford
- Program Costs and Fees
- VA Funding Fee
- Use our VA MORTGAGE QUALIFICATION CALCULATOR to calculate the VA funding fee
Type of Veteran Down Payment VA Funding Fee for
First Time Use
VA Funding Fee for
Regular Military 0% – 4.99% 2.15% of loan amount 3.30% of loan amount 5% – 9.99% 1.50% of loan amount 1.50% of loan amount 10% or more 1.25% of loan amount 1.25% of loan amount Reserves / National Guard 0% – 4.99% 2.40% of loan amount 3.30% of loan amount 5% – 9.99% 1.75% of loan amount 1.75% of loan amount 10% or more 1.50% of loan amount 1.50% of loan amount
- VA Loan Limits
- Use our VA LOAN LIMIT CALCULATOR to determine the VA loan limit in your county
Number of Units Contiguous States, District of Columbia,
and Puerto Rico
Alaska, Guam, Hawaii, and the U.S. Virgin Islands Basic Standard High Cost General High Cost 1 $453,100 $679,650 $679,650 $1,019,475
- Mortgage Program and Type
- Property Eligibility
- Related FREEandCLEAR Resources
The U.S. Department of Veterans Affairs (VA) offers mortgage programs for eligible active and retired military personnel, including individuals in the reserves and national guard. The VA guarantees 25% of the mortgage amount, which protects the lender from losing significant money in the event of foreclosure. You can obtain a VA mortgage through an approved lender, such as a bank, mortgage broker or credit union, that offers the VA program.
The key benefit of a VA mortgage is that you can obtain a mortgage and buy a home with no down payment. This represents a huge opportunity, especially for first-time home buyers who may struggle to save enough money for a down payment. Another benefit of the VA program is that interest rate for VA loans is typically .250% - .500% lower than the interest rate for other mortgage programs. VA mortgage rates are lower because the government insures the loan and because VA borrowers are financially responsible and credit-worthy.
Although the VA determines program guidelines and borrower eligibility, borrowers do not apply for the program with the VA. Instead, borrowers apply for VA loans through approved lenders such as banks, mortgage banks, mortgage brokers and credit unions. These approved lenders make sure that applicants meet VA Home Loan Program eligibility requirements and qualify for the loan according to the VA's borrower qualification policies. Not all lenders offer VA mortgages but many do. Click on a lender in the table below or INTEREST RATES to contact lenders about the VA Home Loan.
You can also use the FREEANDCLEAR LENDER DIRECTORY to find lenders in your state that offer the VA mortgage program
To be eligible for a VA mortgage, you must meet certain borrower qualification requirements and receive a certificate of eligibility. In general, eligibility is determined by date of military service, length of service, if the service occurred during wartime or peacetime and the type of discharge from the military (applications involving other than honorable discharges will usually require further investigation by the VA). Typically, you are eligible for VA home loan programs if you served on active duty for more than 90 consecutive days during wartime or more than 181 days during peacetime. National Guard members and Reservists are required to have served at least six years. Spouses of deceased or missing military personnel may also be eligible for VA Mortgage Programs. You can review a detailed description of the eligibility rules and apply online to for your Certificate of Eligibility through the VA website.
Borrowers who are eligible for the VA home loan program qualify for an entitlement benefit, which is essentially the amount of the mortgage that the VA guarantees in the event of default or foreclosure. When you get a VA home loan, you use all or part of your entitlement. One of the main benefits of the VA home loan program is that eligible borrowers can use the program an unlimited number of times over their lifetime as long as they restore their entitlement. If you have used your VA entitlement in the past, the entitlement can be fully restored if the property financed is sold and the VA home loan is repaid in full. Please note that if a VA mortgage is paid off in full, it is possible to keep the home for use as an investment property or vacation home and fully restore your VA entitlement by using a one-time VA entitlement restoration benefit.
If you currently have a VA loan outstanding, you may be able to use the VA program for another mortgage if you are not using your full entitlement (or if you use your tier two VA entitlement). For example, if you have a VA loan on your current home and you are transferred, you may decide to keep that property and rent it out and use your remaining entitlement on a VA loan to buy a home in your new location. Borrowers who do not have a enough entitlement remaining may be required to make a down payment to use the VA program although they still benefit from the advantages of the program including paying a lower mortgage rate and not paying ongoing mortgage insurance. Please note that VA home loans can only be used to purchase owner-occupied properties. If you are considering using or re-using the VA home loan program, we recommend that you contact the VA to determine your eligibility status and the current amount of your entitlement.
Borrower Residual Income Requirement
The VA requires that the borrower have a minimum level of residual (leftover) income after accounting for the monthly mortgage payment and other expenses. Residual income is determined by subtracting the following expenses from monthly gross income:
The minimum level of residual income required to qualify for a VA loan depends on the loan amount, the number of people in the borrower's household and the region of the country in which the property is located. Lenders may have some flexibility to reduce the residual income requirements by 5% or more for active-duty or retired personnel if they will continue to benefit from using military-based facilities located near the property being purchased. The table below outlines the residual income required to qualify for a VA loan.
When applying for a VA mortgage, you will need to complete a VA Loan Analysis Form to determine your residual income and ability to qualify for the mortgage. We provide an example VA Loan Analysis Form for your review as well as an instructional video below.
Borrower Debt-to-Income Ratio
To qualify for a VA loan borrowers typically must have a maximum debt-to-income ratio of 41%. The debt-to-income ratio represents the maximum percentage of a borrower's monthly gross income that can be spent on total monthly housing expense plus other monthly debt payments such as credit card, auto and student loans. The 41% maximum debt-to-income ratio is lower than the debt-to-income ratio limits typically used for conventional mortgage programs and other government-backed programs such as the FHA Mortgage Program. The lower the debt-to-income ratio, the smaller the mortgage you qualify for. Please note that it is possible to qualify for a VA loan with a debt-to-income ratio greater than 41% although lenders are required to provide additional documentation to support the use of a higher ratio.
The VA home loan program typically requires that borrowers have a minimum credit score of 620 to qualify. We recommend that you review your credit report six months to a year before you start the mortgage process to address potential issues.
Borrower Financial Reserves Requirement
The VA Mortgage Program does not require that borrowers hold savings in reserve at mortgage closing for purchases of one or two unit properties, although FREEandCLEAR recommends that you keep enough savings in reserve to cover three-to-six months of total monthly housing expense. For purchases of three or four unit properties borrowers are required to hold six months of total monthly housing expense (mortgage payment plus property tax and homeowners insurance) as savings in reserve at mortgage closing. So if your total monthly housing expense is $2,000, you would be required to hold at least $12,000 in reserves at the time the mortgage closes. Additionally, if you own rental properties you are required to hold three months of total housing expense in reserves at closing for each rental property that is not financed by a VA loan.
Borrower Income Limit
Unlike many other no or low down payment mortgage programs, the VA Home Loan Program does not apply borrower income limits.
First-Time and Repeat Home Buyers
The VA Home Loan Program is available to both first-time and repeat home buyers as compared to other no or low down payment programs that are only available to first-time buyers. Repeat users of the VA Program are required to pay a higher upfront VA funding fee.
The interest rate you pay on a VA mortgage depends on several factors including your credit score. Borrowers with higher credit scores receive the program’s best interest rate while borrowers with lower credit scores pay higher rates. For borrowers with good credit scores, the interest rate for a VA loan is typically .250% - .500% lower than the interest rate for other conventional low down payment programs and comparable to the interest rate for government-backed programs such as the FHA and USDA mortgage programs. VA interest rates are among the lowest of all mortgage programs. The interest rate for VA loans is lower because the program is backed by the VA and borrowers are more credit-worthy. Borrowers should shop lenders to find the VA mortgage with the best terms.
Along with their mortgage payment, the VA program requires the borrower to pay property tax and homeowners insurance into anon a monthly basis. The impound account does not affect the amount of fees the borrower is required to pay for the mortgage.
Borrowers are required to pay standard lender fees and closing costs with the VA Home Loan Program. Aside from the up-front VA funding fee, borrowers are not required to pay additional fees to apply for the program.
The VA mortgage program requires that borrowers pay a one-time, up-front VA funding fee. The VA funding fee is calculated as a percentage of the mortgage amount. The fee may be paid in cash or added to the mortgage amount, or a combination of the two, as long as the total mortgage amount does not exceed the VA mortgage limit. Some borrowers may be exempt from paying the VA funding fee. For example, veterans with a service-related disability rating are not required to pay the VA funding fee.
The table below shows the VA funding fees for home purchase loans. The amount of VA funding fee depends on the down payment amount (if you decide to make a down payment), type of military service (regular military versus reserves / national guard) and if this is your first time using a VA mortgage program. An eligible veteran may use the VA mortgage program multiple times although the funding fee increases after the first use.
The great news about a VA loan is that borrowers are not required to pay any ongoing monthly mortgage insurance fees such as private mortgage insurance (PMI) or FHA mortgage insurance premium (MIP) like they are required to pay with most no or low down payment mortgage programs. Not requiring ongoing mortgage insurance fees results in lower total monthly housing expense and makes home ownership more affordable.
The VA does not technically impose a maximum amount that you can borrow with a VA loan; however, loan limits establish the maximum amount of a loan the VA guarantees which effectively limits the mortgage size for most VA borrowers. The maximum mortgage guaranty amount (available for loans over $144,000) is 25% of the VA mortgage limits shown in the table below.
A veteran with a full entitlement available may borrow up to the mortgage limits shown in the table below and the VA guarantees 25% of the loan amount. So while technically there is no maximum VA loan amount, in practice lenders apply VA loan limits to program applicants. As outlined in the table below, VA loan limits vary by county and range from $453,100 to $679,650 for high cost areas in the contiguous United States and Puerto Rico. In Alaska, Hawaii, Guam and the U.S. Virgin Islands VA loan limits range from $679,650 to $1,019,475 for high cost counties.
If the borrower contributes a down payment, lenders may be willing to lend a loan amount that exceeds the VA loan limit as long as the borrower qualifies for the mortgage based on his or her income, debt and credit score. For loan amounts that exceed the VA loan limit, lenders typically require borrowers to make a down payment equal to 25% of the amount by which the loan exceeds the loan limit. For example, if the VA loan limit is $453,100 and the borrower wants a $553,100 mortgage, then the borrower would be required to make a $25,000 down payment ($25,000 = 25% * $100,000 (amount by which the mortgage exceeds the loan limit)).
Only selected mortgage programs are eligible for the VA Home Loan Program. 10 - 30 year fixed rate mortgages plus 3/1, 5/1, 7/1 and 10/1 adjustable rate mortgages (ARMs) are eligible for the program while interest only mortgages are not permitted.
The VA Home Loan Program applies to both home purchase mortgages as well as refinancings. Homeowners with VA loans can use the VA Streamline Refinance Program (VA IRRRL Program) to refinance their mortgage with less documentation and borrower qualification requirements including no credit score or appraisal report. The VA also offers the the VA Energy Efficient Mortgage (EEM) Program that enables borrowers to include up to $6,000 in energy efficiency home improvements in their VA loan amount. The VA EEM Program applies to both purchase loans and refinancings.
The VA mortgage program only applies to owner occupied primary residences. You can use the VA program to purchase single-family homes, condominiums or multi-family properties with up to four units such as an apartment building with four residences. For multi-family properties at least one of the units needs to be owner occupied, or lived in by the individual(s) who obtained the VA loan to purchase the property. Investment properties and vacation homes are not permitted under VA program guidelines.