The VA home loan is one of the most valuable benefits available to service members, veterans and surviving spouses — and one of the least understood. Millions of eligible borrowers have never used it. Many who have used it made decisions that cost them thousands because nobody explained the details upfront. Here are 10 things that matter before you sign anything.
1. You Don’t Need a Down Payment, But That Doesn’t Mean You Shouldn’t Make One
No down payment is required for Department of Veterans Affairs loans when you have full entitlement, and no private mortgage insurance (PMI) is required, regardless of how much you put down. But a down payment of 5 percent or more reduces your funding fee from 2.15 percent to 1.50 percent on a first use. On a $400,000 home, that saves $2,600 in fees. A 10 percent down payment reduces it further to 1.25 percent. Run the math before deciding that zero down is automatically the right call.
2. The Funding Fee Isn’t Optional, But It May Be Waivable
Most VA borrowers pay a one-time funding fee that goes directly to the VA to help fund the program. In 2026, the fee ranges from 0.5 percent to 3.30 percent depending on your loan type, down payment and whether this is your first use or a subsequent use. It can be rolled into the loan rather than paid at closing. Critically: Veterans receiving VA compensation for any service-connected disability are fully exempt from the funding fee, as are surviving spouses receiving Dependency and Indemnity Compensation and active-duty service members awarded the Purple Heart.
There is no minimum disability rating to qualify for the exemption. Any rating that results in compensation qualifies. If you paid the funding fee and later received a disability rating with an effective date on or before your closing date, you are entitled to a refund. File VA Form 26-8937 with your Closing Disclosure and VA decision letter. The VA issues a cash refund directly; it does not automatically reduce your loan balance.
Read More: VA Funding Fee
3. There Is No Loan Limit if You Have Full Entitlement
As of 2020, the VA eliminated loan limits for borrowers with full entitlement. You can borrow as much as a lender will approve with no down payment required, regardless of home price, subject to the lender’s own underwriting standards. The 2026 conforming loan limit of $832,750 baseline and $1,249,125 in high-cost areas still matters for veterans with partial entitlement: those who have an active VA loan or previously lost entitlement through foreclosure without repaying the VA. If you have full entitlement, the loan limit does not apply to you.
4. Subsequent Use Costs More, and Restoring Entitlement Doesn’t Always Reset the Fee
If you have used a VA loan before, your funding fee on a subsequent purchase with less than 5 percent down rises from 2.15 percent to 3.30 percent. That is an increase of $4,600 on a $400,000 loan. Restoring your entitlement after paying off or selling a home does not automatically reset you to first-use rates. The VA treats any prior use on a non-manufactured home as establishing subsequent-use status for future purchases regardless of entitlement restoration, meaning many veterans pay the higher rate on every loan after their first even when they think they should be back at first-use pricing.
5. The VA Appraisal Is Not a Home Inspection, and It Can Kill a Deal
Every VA purchase requires a VA appraisal conducted by a VA-approved appraiser. The appraiser determines the home’s value and checks that it meets VA Minimum Property Requirements (MPRs) — basic standards for safety, soundness and sanitation. If the home fails MPRs for issues such as peeling paint, a leaking roof, broken windows, faulty electrical or pest damage, the VA can require repairs before closing. On a fixer-upper, this can kill the deal entirely or require the seller to complete repairs before the VA will approve the loan. The appraisal is not a substitute for a home inspection, which the VA strongly recommends as a separate step.
6. Your COE Is the Starting Point, And It Shows Your Available Entitlement
A Certificate of Eligibility, known as a COE, is the document lenders use to verify your VA loan eligibility and see your current entitlement status. You need one before any lender can process a VA loan. Veterans can obtain a COE through eBenefits, through their lender’s VA portal, or by mailing VA Form 26-1880 to the VA Eligibility Center. The COE shows your service period, character of discharge, and available entitlement. If your entitlement shows as partially used, that affects your loan limit and down payment requirements. Review it before you start shopping for a home.
Read More: VA Loan Certificate of Eligibility Guide
7. VA Loans Can Be Assumed, and That Is a Double-Edged Sword
A VA loan is assumable, meaning a buyer can take over your existing loan with its original interest rate rather than taking out a new one. In a high-rate environment, this can make your home significantly more attractive to buyers. But if a nonveteran assumes your VA loan and later defaults, your entitlement can be negatively affected even though you no longer own the home.
If someone assumes your VA loan, require that your entitlement be formally substituted — meaning they replace your entitlement with their own qualifying entitlement — before closing. Failing to do this has cost veterans their entitlement for years.
8. Divorce Affects Your Entitlement, Sometimes Permanently
If you used your VA entitlement to purchase a home and that home is awarded to your nonveteran spouse in a divorce, your entitlement remains tied up in that property until the loan is paid off or refinanced out of your name. You cannot use your full entitlement for a new purchase until your name is off the loan, which requires either the nonveteran spouse to refinance into a conventional loan or the home to be sold. This is one of the most common entitlement traps veterans encounter and one of the least understood before it happens.
Read More: Your VA Loan After a Divorce: What to Know Before You Sign Anything
9. Residual Income Is the Rule That Separates VA Loans From Everything Else
Most mortgage programs focus primarily on your debt-to-income ratio. VA underwriting uses residual income: the amount of money left over each month after all major expenses including housing, taxes and debt payments are covered. Residual income requirements vary by region and family size and are set by the VA. A loan that might fail debt-to-income requirements at a conventional lender can sometimes succeed on a VA loan because the borrower’s residual income meets VA standards. This is why some veterans with higher debt loads can qualify for a VA loan when other programs turn them away. It is also why VA loans historically have lower default rates than any other mortgage type.
10. You Can Use It More Than Once — and in Some Cases Simultaneously
The VA home loan is not a one-time benefit. You can use it multiple times over your lifetime, subject to available entitlement and the funding fee rules discussed above. You can also use remaining entitlement to purchase a second property while maintaining an existing VA loan — for example, if you PCS to a new duty station and want to buy a second home rather than sell the first.
The mechanics of using partial entitlement for a second concurrent loan are more complex and require a lender experienced with VA loans to navigate correctly. But the option exists, and many veterans do not know it does.
Veterans and service members can begin the VA loan process by obtaining a Certificate of Eligibility at VA.gov, contacting a VA-approved lender, or calling the VA Home Loan Guaranty program at 877-827-3702. Veterans Service Organizations including the DAV, VFW, and American Legion also offer free guidance on the home loan benefit.
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