VA Loans: The 0% Down Mortgage More Veterans Should Know About

If you’re a Veteran, active-duty service member, or eligible surviving spouse thinking about buying a home, there’s one mortgage option you should understand before deciding how to finance your purchase: the VA home loan.

VA loans are one of the most valuable home financing benefits available to those who have served, yet many eligible buyers either don’t realize they qualify or don’t fully understand how much the program can offer.

The biggest benefit gets most of the attention: eligible borrowers can purchase a home with 0% down.

But that’s far from the only reason a VA loan deserves a closer look.

After 26 years in the mortgage industry and years of helping Veterans and military families navigate the homebuying process, I’ve seen firsthand how valuable the VA loan can be when it’s used correctly.

What Is a VA Loan?

A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs and offered through approved private lenders.

Because the VA guarantees a portion of the loan, lenders are able to offer qualified borrowers benefits that can be difficult to find with other mortgage programs.

VA loans can be used to purchase several types of eligible primary residences, and qualified borrowers may be able to use the benefit more than once during their lifetime.

Can You Really Buy a House With 0% Down Using a VA Loan?

Yes.

For eligible borrowers, a VA loan can allow you to finance 100% of the purchase price with no required down payment, subject to qualification, entitlement, appraisal, and other VA and lender requirements.

That means a $300,000 home does not automatically require you to save $15,000, $30,000, or $60,000 for a down payment before you can become a homeowner.

And according to the Department of Veterans Affairs, nearly 90% of VA-backed home loans are made with no down payment.

That can make homeownership possible sooner while allowing a buyer to keep more of their savings available for moving expenses, emergencies, repairs, furnishings, or simply maintaining a financial cushion after closing.

VA Loans Don't Require Monthly Mortgage Insurance

This is another major benefit that sometimes gets overlooked.

A conventional mortgage with less than 20% down will commonly require private mortgage insurance, or PMI. FHA loans generally include mortgage insurance premiums.

VA loans do not require monthly PMI or MIP.

That can make a meaningful difference in the monthly payment and overall cost of financing a home.

What About the VA Funding Fee?

Most VA borrowers will encounter something called the VA funding fee.

The funding fee is a one-time charge that helps support the VA home loan program. The amount varies depending on factors including whether you've used your VA loan benefit before and the amount of your down payment.

For a purchase with less than 5% down, the current funding fee is generally:

• 2.15% for first use

• 3.30% for subsequent use

The fee can generally be financed into the loan rather than paid entirely out of pocket at closing.

But here's an important detail:

Some borrowers are completely exempt from the VA funding fee.

For example, Veterans receiving VA compensation for a service-connected disability are generally exempt. Other exemptions may also apply depending on the borrower's circumstances.

Your Certificate of Eligibility can help your lender determine whether a funding fee applies to you.

Do VA Loans Have a Minimum Credit Score?

This is one of the most common misconceptions about VA financing.

The Department of Veterans Affairs itself does not establish a minimum credit score for VA-backed home loans.

Individual lenders, however, may establish their own credit requirements.

So if you've assumed your credit automatically prevents you from using your VA benefit, don't count yourself out without having a lender actually review your situation.

Credit is only one part of the overall loan qualification.

Who May Qualify for a VA Loan?

VA loan eligibility is based primarily on your service history and duty status.

Depending on the circumstances, eligibility may extend to:

• Veterans

• Active-duty service members

• Members of the National Guard

• Reserve members

• Certain eligible surviving spouses

The exact service requirements vary, which is why the best place to start is often with your Certificate of Eligibility, or COE.

Your COE verifies to the lender that you meet the VA's service requirements for the home loan benefit.

And if you don't already have yours, don't let that stop you from reaching out. Your lender can often help obtain it as part of the process.

Can You Use a VA Loan More Than Once?

Yes.

Using your VA loan benefit once does not necessarily mean you've used it up forever.

VA entitlement can potentially be restored after a previous VA-financed property is sold and the loan is paid off. In some circumstances, borrowers may even have remaining entitlement while another VA loan is still outstanding.

This is particularly important for Veterans who purchased a home years ago and assume they can no longer use their VA benefit.

Before ruling it out, it's worth checking your current entitlement.

Are VA Loans Only for First-Time Homebuyers?

No.

You do not have to be a first-time homebuyer to use a VA loan.

Whether you're buying your first house, moving into a larger home, relocating, downsizing, or purchasing again after selling a previous property, a VA loan may still be an option if you meet the eligibility and qualification requirements.

Do VA Loans Have Closing Costs?

A 0% down payment does not necessarily mean $0 needed at closing.

There may still be closing costs, prepaid taxes, homeowners insurance, appraisal costs, title expenses, and other costs associated with purchasing a home.

However, VA rules provide some flexibility regarding which costs a Veteran can pay, and sellers or builders may be able to provide credits toward certain closing costs.

This is why it's important to look at the entire transaction, not simply the down payment.

A good mortgage strategy should answer two different questions:

How much can I qualify for?

and

How much cash will I actually need to get into the home?

Those numbers aren't always the same.

One of the Biggest VA Loan Myths: Sellers Don't Like Them

Some Veterans hesitate to use their benefit because they've heard that sellers don't want to accept VA offers.

A VA-financed offer does have specific appraisal and property requirements, but that doesn't automatically make it a weak offer.

How the financing is presented matters.

A strong preapproval, good communication between the lender and real estate agents, and a lender who understands VA financing can make a significant difference when an offer is submitted.

When one of my VA buyers makes an offer, I'm available to speak directly with the listing agent, answer questions about the financing, and help them understand the strength of the buyer's approval.

Your financing should support your offer, not leave the people on the other side of the transaction wondering what's happening.

You Earned the Benefit. Make Sure You Understand It.

The VA home loan isn't a special promotion or temporary homebuyer incentive.

It's a benefit earned through service.

If you're eligible, understanding how it works can open options you may not have realized were available, including the possibility of buying with 0% down, avoiding monthly mortgage insurance, and keeping more of your savings in the bank.

And you don't need to know whether you're ready to buy before having the conversation.

If you're a Veteran, active-duty service member, National Guard or Reserve member, or eligible surviving spouse, I can help you determine whether you may qualify, obtain your Certificate of Eligibility, and compare a VA loan with your other mortgage options.

Sometimes the first step isn't applying for a mortgage.

It's simply finding out what you've already earned and what it could make possible.

Always here as a resource

Jodi Vermillion VP | Branch Manager | Mortgage Strategist Vermillion Lending Team | Powered by Ruoff Mortgage NMLS #227336 | Ruoff Mortgage NMLS #141868