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VA Home Loan Program

VA Home Loan Program

    Key VA Mortgage Considerations
    Pros Cons
    • Ability to purchase home with little or no down payment
    • Typically lower interest rate than conventional mortgage
    • Potentially lower closing costs
    • Borrower not required to pay ongoing monthly mortgage insurance (PMI or FHA MIP)
    • One-time, up-front VA funding fee creates additional cost for borrower
    • Limits on mortgage amount
    • More conservative borrower qualification requirements
    • VA Home Loan Program Overview
    • 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.

    • How the VA Home Loan Program Works
    • 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.

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      Rate Details*
      Loan Program:  
      Monthly Payment:  
      Points  More Info:
      Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
      Total Lender Fees:  
      Loan type:  
      Property Value:  
      Loan to Value:  
      Credit Rating:  
      Date Submitted:  
      Monthly Housing Payments
      P & I More Info
      Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
      Mortgage Insurance More Info
      Mortgage Insurance: The monthly cost for a policy that protects the lender in case you’re unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%.
      Property Tax More Info
      Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ...
      Homeowner Insurance More Info
      Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ...
      Homeowner Association Fee More Info
      Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs.
      (If Any)
      Total Monthly Housing Payments
      Lender Fees
      Points More Info
      Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
      Origination Fee More Info
      Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan.
      Credit Report Fee More Info
      Credit Report Fee: Fee charged to obtain an applicant’s credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower’s creditworthiness.
      Tax Service Fee More Info
      Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender.
      Processing Fee More Info
      Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower.
      Underwriting Fee More Info
      Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property’s value, and perform a risk analysis on the overall loan package.
      Wire Transfer Fee More Info
      Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower.
      (If Any)
      FHA Upfront Premium More Info
      FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception.
      (If any)
      VA funding Fee (If any)
      Flood Fee
      Other Fees More Info

      Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees)

      The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower’s attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.

      Total Lender Fees
      *Actual rates and other information may vary. Sponsored results shown only include participating lenders. The information you enter on this page will only be shared with lenders you choose to contact, either by calling the phone number or requesting a quote.
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      Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Click here for more information on rates and product details.
    • VA Home Loan Program Borrower Eligibility Requirements
    • 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.

    • VA Home Loan Program Borrower Qualification Requirements
    • 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:

      • Taxes
      • 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)

      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.

    • VA Residual Income Requirements
      Mortgage 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 seven
      Mortgage 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
    • 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.

    • FREEandCLEAR Mortgage Instructional Video

      VA Loan Analysis Form Instructional Video

    • 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.

    • CalculatorUse our VA MORTGAGE QUALIFICATION CALCULATOR to determine what size VA loan you can afford
    • Credit Score

      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.

    • Program Costs and Fees
    • Mortgage Rate

      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.

      Impound Account

      Along with their mortgage payment, the VA program requires the borrower to pay property tax and homeowners insurance into an impound account on a monthly basis.  The impound account does not affect the amount of fees the borrower is required to pay for the mortgage.

      Extra Fees

      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.

    • VA Funding Fee
    • 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.  The VA funding fee is required for almost all borrowers although some veterans may be exempt. For example, veterans with a disability rating may not be required to pay the VA funding fee.

    • CalculatorUse our VA MORTGAGE QUALIFICATION CALCULATOR to calculate 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.

    • Type of Veteran Down Payment VA Funding Fee for
      First Time Use
      VA Funding Fee for
      Subsequent use
      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
    • 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. 

    • VA Loan Limits
    • 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.

    • CalculatorUse our VA LOAN LIMIT CALCULATOR to determine the VA loan limit in your county
    • 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.

    • 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
    • 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)).

    • Mortgage Program and Type
    • Mortgage Program

      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.

      Mortgage Type

      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.

    • Property Eligibility
    • 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.

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