Common VA Loan Questions First-Time Buyers Ask

If you’re a veteran, active-duty service member, or military spouse exploring your first home purchase, you’ve probably heard about Veterans Affairs (VA) loans by now. But once you start digging into the details of something as seemingly complex as a mortgage, it’s easy to end up with more questions than answers.

That’s normal. The VA home loan program comes with its own vocabulary, eligibility rules, and process, and no two first-time VA homebuyers will have the exact same questions or the exact same experience. Below, we’ve gathered some of the common VA loan questions we hear most and answered them in clear terms, so you can move forward with a clearer picture of what to expect.

What Is a VA Home Loan, and Who Qualifies?

The VA home loan program is available to eligible veterans, active-duty service members, and certain surviving spouses. Loans are issued to qualified borrowers by private lenders, like us, and a portion of each loan is guaranteed by the VA, which is part of why the program can offer features and benefits that differ from many conventional mortgage options.

VA loan eligibility typically depends on your length of service, duty status, and discharge type. Because those details vary from person to person, a Certificate of Eligibility (COE) is the official document that confirms whether you qualify and how much entitlement you have available. Your mortgage banker can help you understand your eligibility and can often help you request your COE as part of the loan process.

Do VA Loans Require a Down Payment?

This is one of the questions we hear most, and for good reason: a no-down-payment option is one of the most well-known VA loan benefits. For some borrowers, it may be surprising that this sort of option would be available. But many eligible borrowers with full entitlement can purchase a home without putting money down.

That said, whether a down payment is required can depend on factors like your entitlement, the loan amount, and the price of the home you’re buying. Because every situation is different, it’s worth talking through your specific numbers with your banker before assuming how much, if anything, you’ll need upfront.

Is Mortgage Insurance Required on a VA Loan?

No. Unlike many conventional loans, where borrowers who put down less than 20% typically pay private mortgage insurance (PMI), VA loans don’t require it. Instead, most VA loans include a one-time VA funding fee.

What Is the VA Funding Fee, and Will You Have to Pay It?

The VA funding fee is a one-time charge that helps keep the VA home loan program available to future generations of veterans and service members. The amount can vary based on factors like your down payment, whether this is your first time using your VA loan benefit, and the type of loan you’re getting.

Some veterans, including many with a service-connected disability rating, may be exempt from the funding fee. Because exemption eligibility depends on your individual circumstances, your banker can help confirm how the funding fee, or a possible exemption, applies to your loan.

How Do You Request a Certificate of Eligibility?

Your Certificate of Eligibility confirms your VA loan eligibility and shows your available entitlement. In many cases, your banker can request your COE electronically once you’ve provided basic service information. You can also request it yourself directly through the VA.

Documents like a DD-214 (for veterans) or a statement of service (for active-duty service members) are commonly used to verify eligibility, though the exact paperwork can vary depending on your service history.

What Other Costs Should First-Time VA Homebuyers Expect?

Even with a no-down-payment option, buying a home still comes with costs. Closing costs, a VA appraisal, property taxes, and homeowners insurance are all part of the process, so it’s worth budgeting for them ahead of time. VA guidelines also outline which closing costs a veteran can and can’t pay directly, so ask your banker to walk you through what applies to your purchase. Seller concessions and lender credits may also help reduce some upfront costs, when available.

Key Takeaways

• The VA home loan program is a benefit for eligible veterans, active-duty service members, and certain surviving spouses.
• Many eligible borrowers with full entitlement can buy a home with no down payment, though your specific situation may vary.
• VA loans don’t require PMI, but most include a one-time VA funding fee. Some veterans may qualify for an exemption.
• A Certificate of Eligibility confirms your VA loan eligibility and entitlement, and your banker can often help you request it.
• Closing costs, appraisals, and other expenses still apply, even without a down payment.

Additional VA Loan Resources

Odds are, you have a few more questions than what we’ve covered here. In that case, we wanted to include some extra resources that may be helpful:

• How do VA loans work in a competitive market?
• How do pre-approvals and pre-qualifications work for VA loans?
• How does eligibility work for VA loans?
• What do I need to apply for a VA loan?
• Can I use a VA loan more than once?

Final Thoughts

Every first-time VA homebuyer’s situation looks a little different, and that’s exactly why so many questions come up along the way. The good news is that most of them have straightforward answers once you have someone to walk you through the details.

If you’re just starting to explore your options, talking with a mortgage banker who works with VA loans regularly can help you understand where you stand and what to expect next, before you’ve even started looking at homes.