Buying a Home: A Simple Guide to VA Loans for Veterans

In the world of home loans, veterans home loans offer great opportunities for veterans. If you’re a veteran thinking about buying a home, VA loans are amazing. These government loans offer low VA interest rates, no mortgage insurance, and no down payment requirements, making them an excellent choice for eligible individuals.

But what exactly is a VA loan, what are the VA loan benefits, and how can you determine if you qualify? This comprehensive guide unravels the complexities of VA loans, aiming to make your homeownership journey smoother.

What Are VA Loans?

A VA mortgage is a home loan program backed by the U.S. Department of Veterans Affairs (VA). This means the VA guarantees a portion of the loan to private lenders, like banks and mortgage companies. 

Who are these loans for? 

VA loans are mortgages designed for active-duty service members, veterans, eligible surviving spouses, National Guard, and Reservists. The Department of Veterans Affairs guarantees these loans, making them less risky and more attractive to lenders, so in turn they can offer veterans more favorable terms compared to traditional home loans.

Benefits of VA Mortgages

VA loans come packed with advantages that can significantly ease the burden of buying a home:

No Down

VA loans don’t require a down payment, making it easier for veterans to buy homes. Unlike conventional loans, VA loans often allow you to purchase a home with little to no money down.

Low Interest

Current VA home loan rates are usually much lower than conventional mortgage rates. This translates to lower monthly payments and significant savings.

No Private Mortgage Insurance (PMI):

PMI is an additional monthly fee required for conventional loans with a down payment less than 20%. Mortgage Insurance Premium (MIP) is also an additional monthly fee required for FHA loans. VA loans don’t have this expense reducing a big portion of monthly payments.

VA Loan Requirements

To be eligible for a VA housing loan, you must meet specific VA loan eligibility service requirements. Generally, you must have served on active duty for a certain period or be a National Guard or Reserve member. Additionally, you must have a decent credit score and a debt-to-income ratio (DTI) that falls within acceptable limits. DTI is the percentage of your gross monthly income that goes towards debt payments.

To qualify for a VA loan

Borrowers must meet specific va home loan requirements: 

Military Discharge Papers:

This document verifies your military service and discharge status (DD Form 214).

VA Certificate of Eligibility (COE):

To simplify the process, the Department of Veterans Affairs created a Certificate of Eligibility (COE). This document verifies your military service and confirms your entitlement to a VA loan. You can obtain your COE online through the VA website.

Minimum Service Requirements:

Veterans, active-duty service members, and certain members of the National Guard and Reserves must meet minimum service requirements.


Paystubs, W2s, tax returns, award letters, bank statements, etc, will be used to assess your income and ability to repay the loan.


Your credit score will be a factor in determining your loan terms and interest rate. The minimum credit score requirement is 620.

Debt-to-Income Ratio:

 It is used to ensure you can afford mortgage payments. VA loans have the most lenient DTI requirements than any other type of loan.

Property Requirements:

 VA loans can only be used for primary residences, but similar to FHA loans, they also must meet certain safety standards.

VA Funding

VA loans may have an upfront funding fee, which is normally included in the loan amount. 

VA Funding Fee

The following table shows the current VA funding fee rates on purchase loans for Veterans, active military, Reserves, and National Guard members. 

2024 VA Funding Fee for Refinances

The 2024 VA Funding Fee for Cash-Out Refinance Loans is 2.15% for first use, and 3.3% after the first use. Unless otherwise exempt, the VA funding fee for borrowers using the VA streamline refinance (IRRRL) is 0.5% regardless of service history or prior usage.

Exceptions to Paying the Funding Fee

The VA funding is a one-time cost added to your loan amount when you get a VA loan. Who Gets a Free Pass? You might not have to pay the VA funding fee if you fall into one of these categories:
Veterans getting disability pay for an injury or illness from your service.
Veterans who would get disability pay, but you get retirement payinstead.
Veterans who almost qualify for disability pay based on a medical exam before you left the service.
Veterans on active duty who qualify for disability pay but aren’t getting it yet.
Veterans who got a Purple Heart.
Surviving spouses of veterans who can get a VA loan.

How Do I Know If I’m Exempt?

Lenders will usually check your Certificate of Eligibility (COE) or a Verification of VA Benefits (think of it as a VA funding fee exemption form). Some situations can be tricky, and only the VA can decide who doesn’t have to pay.
What If I Already Paid? If you paid the fee but later received disability compensation, you might be able to get your money back.

Types of VA Loans

VA loans offer different options to fit your specific needs:


These are the most common type of VA loan, used to finance the purchase of a new or existing home.

Refinance Loans:

This option allows you to tap into your home equity by converting it to cash. You can use the funds for various purposes, such as debt consolidation, home improvements, or educational expenses.

Interest Rate Reduction Refinance Loan (IRRRL):

Also known as a streamlined refinance loan, this option allows you to refinance your existing VA loan to secure a lower interest rate and potentially lower your monthly payment

Using a VA Loan Calculator

Current VA Loan Rates

It’s essential to stay informed about current VA loan rates, as they can fluctuate daily. Veterans should monitor trends and consult with lenders to secure the best rates available. 
With a VA loan, we can offer you the best interest rates. Eligible veterans and service members generally find that VA home loan rates are much lower than conventional mortgage rates.

What are the VA Loan Limits? 

VA loan limits no longer apply to qualified Veterans with their full VA loan entitlement. The limits do not capitalize on the amount you can borrow but set the maximum amount you can finance without any down payment.
As of 2020, veterans, reservists, surviving spouses, and active duty members are not subject to any limit. Therefore, every qualified borrower with full entitlement can purchase a property that exceeds the conforming loan limit.

VA Mortgages are Only for Primary Residence

VA Loans restrict property usage to your primary residence. You cannot use them for second homes or investment properties.

VA Loans Have Lower Interst Rates

Generally speaking, VA loan interest rates are substantially lower than Conventional loan interest rates. The only negative to a VA loan is the funding fee. 

Bottom Line VA vs Conventional

If you are buying a primary residence, and have a smaller down payment (less than 20%), the VA loan’s lower interest rate and no PMI can outweigh the VA funding fee. If you have a high credit score and can swing a 20% down payment, a conventional loan might be a good option because you’d avoid both the VA funding fee and PMI. 

Compare Rates & Terms

The best way to pick your winner is to compare rates and terms for both options. Your Bluecastle Lending loan officer will set up both loan options in your portal. This will help you decide which loan offers the most significant financial benefit for your situation. 

Bottom Line

VA loans offer a pathway to homeownership for veterans, providing numerous benefits and favorable terms. By understanding VA loan requirements, using resources like getting approved before starting to look for houses, and using a VA calculator with current VA mortgage rates, veterans can embark on their homeownership journey confidently. 
If you’re a veteran dreaming of owning a home, a VA loan option could make that dream a reality. They are much cheaper than rent, and likely, with our Closing Cost Assistance Program for Veterans you will likely need much less money out of pocket than first, last, and security.  

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