Your military service may have opened the door to one of the most valuable home financing benefits available. But knowing you have a VA home loan benefit and understanding how to use it are two different things.
Maybe you heard about it during a transition briefing. Maybe someone in your unit used theirs to buy a home. Or perhaps you've been out of the military for years and haven't explored whether you're eligible.
Whatever brought you here, your VA home loan benefit is worth understanding.
From buying your first home to using your benefit again, here's what you should know before getting started.
What is a VA home loan?
A VA home loan is a mortgage backed by the U.S. Department of Veterans Affairs (VA) and offered through approved private lenders, including Benchmark Mortgage.
The VA guarantees a portion of the loan, reducing risk for the lender and making certain financing advantages possible for eligible borrowers.
Those advantages can include:
- No down payment required for qualified borrowers when the purchase price doesn't exceed the appraised value and sufficient entitlement is available.
- No monthly mortgage insurance, even when purchasing with no down payment.
- Competitive interest rates compared with some conventional financing options.
- The ability to use your benefit more than once, provided you meet applicable entitlement and lending requirements.
- Refinancing opportunities for eligible homeowners with existing VA loans.
These benefits can make homeownership more accessible, particularly for borrowers who have steady income but haven't saved a large down payment.
And while the VA helps make these advantages possible, you'll still work with a mortgage lender to qualify for financing.
Who is eligible for a VA home loan?
VA home loans are available to eligible veterans, active-duty service members, certain National Guard and Reserve members, and qualifying surviving spouses.
Eligibility depends on factors such as your service history, length of service, and discharge status.
The first step toward confirming your eligibility is obtaining a Certificate of Eligibility (COE).
Your COE verifies that you meet the VA's service-related eligibility requirements. It also provides information about your available entitlement and funding fee exemption status.
You can request your COE through VA.gov or ask your Benchmark loan officer to help you obtain it.
Keep in mind that having a COE doesn't automatically mean you're approved for a mortgage. You'll also need to meet your lender's credit, income, and other financing requirements.
Understanding your VA loan entitlement
If you've started researching VA loans, you've probably encountered the word entitlement.
It sounds complicated, but the basic concept is straightforward.
Your VA loan entitlement represents the amount the VA agrees to guarantee to your lender if you default on your loan.
That guarantee is part of what allows lenders to offer benefits like no-down-payment financing.
Does your entitlement limit how much you can borrow?
Not necessarily. If you have full entitlement, the VA doesn't impose a specific loan limit. However, your lender will still evaluate your income, debts, credit history, and the property's value to determine how much you qualify to borrow.
If you've used your VA benefit before and haven't fully restored your entitlement, different limits may apply to the amount you can borrow without a down payment.
Can You Use Your VA Loan Benefit More Than Once?
Yes! Your VA home loan benefit isn't necessarily a one-time opportunity.
If you've previously purchased a home using VA financing, you may be able to use your benefit again.
For example, selling your home and paying off the VA loan may allow you to request restoration of your entitlement. In certain circumstances, you may also be able to purchase another home while keeping your existing VA-financed property.
The rules depend on your available entitlement and individual circumstances.
Your loan officer can help you understand what your COE shows and which options may be available.
What about the VA funding fee?
One of the biggest advantages of a VA home loan is that it doesn't require monthly mortgage insurance.
However, many borrowers pay a one-time VA funding fee.
The funding fee helps support the VA home loan program and reduces its cost to taxpayers.
The amount depends on factors including:
- Whether you've used your VA loan benefit before.
- Your loan type.
- Your down payment amount, if applicable.
- The amount you're borrowing.
The fee can generally be paid at closing or financed into your loan. Financing the fee increases your loan balance and the interest you'll pay over time.
Some borrowers are exempt from the VA funding fee.
This includes certain veterans receiving VA disability compensation and other eligible individuals, including qualifying surviving spouses.
Your COE can help establish your exemption status, and your loan officer can review the applicable funding fee for your situation.
How does the VA appraisal work?
Like most mortgage loans, a VA home loan requires an appraisal when purchasing a property.
The VA appraisal serves two important purposes: assessing the home's value and determining whether it meets the VA's Minimum Property Requirements.
These requirements help ensure that the property meets basic standards for safety, structural soundness, and sanitation.
There's an important distinction, though: A VA appraisal is not the same as a home inspection.
An appraisal evaluates the property for lending purposes. A home inspection provides a more detailed look at the home's condition and potential maintenance or repair issues.
Even when purchasing with VA financing, getting a separate home inspection is a smart way to better understand the property before committing to the purchase.
If the appraisal identifies a concern, your loan officer and real estate agent can help you understand what needs to happen next.
What costs should you expect with a VA loan?
No down payment doesn't necessarily mean no upfront expenses.
Depending on your transaction, you may still need money for:
- Closing costs and prepaid expenses.
- A home inspection.
- An appraisal.
- Homeowners insurance.
- Property taxes.
- Moving expenses and other homeownership costs.
VA loans also generally require the property to be your primary residence, so they aren't intended for purchasing vacation homes or properties solely for investment purposes.
Understanding these requirements early can help you develop a realistic budget and avoid surprises during the homebuying process.
Already have a VA loan? You may have refinancing options.
Your VA benefit doesn't stop being useful after you purchase a home.
Eligible homeowners with existing VA-backed mortgages may qualify for an Interest Rate Reduction Refinance Loan (IRRRL), sometimes called a VA streamline refinance.
An IRRRL may help you lower your interest rate and monthly payment or move from an adjustable-rate mortgage to a more predictable fixed-rate loan.
The process may involve less documentation than some other refinance options, although eligibility requirements, closing costs, and other conditions still apply.
Refinancing isn't automatically the right move for everyone. Comparing the costs, potential savings, and long-term impact can help you determine whether it makes financial sense.
Make the most of the benefit you've earned.
Your VA home loan benefit is more than a financing option. It's a benefit made available in recognition of your military service, and understanding how it works can help you make confident decisions about homeownership.
At Benchmark, serving the military community is a responsibility we take seriously. Whether you're buying your first home, using your VA benefit again, or exploring refinancing options, our team is here to help you understand the process and make informed decisions.
You earned the benefit. We're here to help you understand how to use it.
Find your local Benchmark loan officer and get started today.