VA Loans
A Complete Guide

A VA loan is a type of government loan backed by the U.S. Department of Veterans Affairs (VA). VA loans are available to veterans, active-duty service members, people who’ve served in the National Guard and the Reserves, and surviving spouses who all meet certain requirements for eligibility.

Before you apply for a VA loan, it’s important to understand how this special government-backed financing works, including its benefits and requirements, and how its interest rate and costs compare to other borrowing options.

What are VA Loans?

VA mortgages are considered non-conforming loans because they don’t meet, or “conform” to, the guidelines of government-sponsored enterprises Fannie Mae and Freddie Mac. The VA doesn’t issue VA loans, but the VA determines who qualifies for them and which lenders issue them.

How do VA Loans Work?

There are several types of VA loans, and they pose less of a risk to lenders because they’re backed by a government agency. This backing allows lenders to set more lenient borrowing requirements on VA loans, including for borrowers with a lower credit score. VA loans also tend to offer a lower interest rate than conventional loans (which are more common and are backed by private lenders, not the government), and they include the option to purchase a home with no down payment.

VA Loan Limits

The VA doesn’t limit how much you can borrow, except in the case of impacted entitlement. But when loan limits do apply to a VA loan, they’re usually based on the conventional loan limit, which for 2024 is $766,550 for one-unit properties in non-high-cost areas of the continental U.S. Additionally, lenders often use the conventional loan limits as the lower bounds for VA jumbo loans.

Certain high-cost areas have higher borrowing limits. If you need a loan even higher than that amount, you can explore the possibility of a VA jumbo loan, which doesn’t require a down payment and may offer a lower rate than a regular jumbo loan.

Common Types of VA Mortgages

Eligible borrowers can choose from a variety of VA loan options when financing or refinancing a home.

VA Loan Type	Description
VA Home Purchase Loan	A standard mortgage backed by the VA
VA Jumbo Loan	A VA loan that exceeds conforming loan limits
VA Renovation Loan	A VA loan that funds a purchase of a home plus the cost to renovate the property
VA Cash-Out Refinance	A VA loan that converts a home’s equity into cash
VA Rate/Term Refinance	A financing option that allows eligible clients not already in a VA loan to refinance for the purpose of lowering their interest rate and/or changing the repayment term of their mortgage
VA Interest Rate Reduction Refinance Loan (IRRRL)	Also known as a VA Streamline, a refinance option for people who want to lower their monthly payment and/or interest rate on an existing VA loan (with less documentation and a lower VA funding fee)

Who can get a VA Loan?

VA loans are typically available for the following types of people:

Veterans
Service members
Currently or formerly activated National Guard members
Surviving spouse
Reserve members

You must also meet at least one of the following criteria for eligibility:

You’ve served 181 days of active service during peacetime.
You’ve served 90 consecutive days of active service during wartime.
You’ve served more than 6 years of service with the National Guard or the Reserves, or 90 days under Title 32 with at least 30 of those days being consecutive.
You’re the spouse of a service member who lost their life in the line of duty or as the result of a service-connected disability. You generally can’t be remarried, although there are exceptions. There are also other requirements for a spouse getting a VA loan.

Wartime or peacetime definitions depend on when you served. For more information, see the VA’s eligibility guidelines.

What is a Certificate of Eligibility?

A Certificate of Eligibility (COE) is a document that shows your mortgage lender that you qualify. To get a COE, you need to demonstrate proof of service. The proof you need to submit varies based on whether you’re an active-duty military member, a veteran or another type of individual who’s VA loan-eligible.

You can request a COE on the VA website or ask your lender to help secure your COE.

VA Loan Requirements

Once you’ve verified your eligibility, you need your income, assets and credit to check out. The property you’re buying also must meet certain requirements. Requirements vary for any loans your lender considers a VA jumbo loan.

Property Type

To be in compliance with VA loan occupancy requirements, the property you buy must be your primary residence within 60 days of purchase. You can’t use a VA loan for a vacation or investment property, but you can use it to buy a one- to four-family home if the eligible member uses it as a primary residence.

Credit Score

The VA doesn’t require a specific minimum credit score for VA loans, so the credit requirement varies by lender. The minimum median credit score for a VA loan from Rocket Mortgage is 580.

Income

Your lender will evaluate your debt-to-income ratio (DTI) when considering your ability to pay back the loan. Your DTI represents how much of your gross monthly income goes toward paying back debt. The VA doesn’t set limits on your DTI, but your lender might.

Down Payment

These are one of the few loan options that don’t require a down payment. Your lender may have specific requirements for a no-down-payment VA loan.

For example, they may require that you have a higher credit score if you’re putting down less than 10%.

Get Started Today

A VA loan is an important benefit available to many people who’ve served in the military or are actively serving. If you qualify for a VA loan, you can get a great interest rate with no money down – which means an upfront savings and an overall more affordable home buying option than you’ll likely find with a conventional loan program.

If you feel like you’re ready, start an application for a VA loan with Carol The Closer today.