Understand your VA loan before you talk to a lender.

Active-duty service members generally meet the minimum service requirement after 90 continuous days of service.

Veterans have eligibility rules that depend on service period, length of service, and discharge character. The specifics vary depending on when you served.

Guard and Reserve members may qualify through six years of service, qualifying active-duty service, or certain Title 32 service. Because the rules depend on orders and discharge status, use the COE process to confirm.

Surviving spouses — an unmarried surviving spouse of a veteran who died in service or from a service-connected disability may be eligible.

The benefit does not expire — it can be used multiple times with entitlement restoration after paying off a prior VA loan.

Your Certificate of Eligibility (COE) is what confirms eligibility for a lender. Apply through VA.gov, your lender (many can pull it electronically in minutes), or by mail.

The VA funding fee is a one-time payment paid to the Department of Veterans Affairs — not to the lender. It helps sustain the VA loan program. It is not a monthly insurance premium and does not accrue interest on its own, though financing it adds to your loan balance and total interest paid.

2026 purchase loan funding fee rates:

On a $400,000 home with $0 down: first use fee = $8,600. Subsequent use fee = $13,200. Both are one-time costs, not monthly charges. Financing the fee reduces upfront cash but increases your loan balance and total interest.

Rates effective through November 14, 2031, per the Blue Water Navy Vietnam Veterans Act of 2019 (Public Law 116-23). Refinance loan rates (IRRRL, Cash-Out) differ — verify current rates at VA.gov.

Many borrowers are exempt from the VA funding fee, including:

• Veterans receiving or eligible to receive VA compensation for a service-connected disability
• Veterans in a pre-discharge claim situation who are found entitled to disability compensation
• Active-duty Purple Heart recipients
• Eligible surviving spouses receiving Dependency and Indemnity Compensation (DIC)

A 10%+ VA disability rating commonly creates this exemption, but confirm your exemption status on your Certificate of Eligibility and with your lender before closing. The exemption should appear on your COE — do not assume it applies without verification.

If you receive a disability rating after closing with an effective date before closing, you may be eligible for a funding fee refund. Contact the VA or your lender to request one — this situation is more common than many veterans realize.

Situations where VA often has advantages:

• Limited cash for down payment — VA allows no down payment where conventional requires 3–20%
• Low down payment scenarios — conventional PMI adds $150–$400/month until 20% equity is reached
• Disability exemption applies — no funding fee means lower upfront costs than most loan types
• Long hold period — the no-PMI advantage compounds over time

Situations where conventional may be worth comparing:

• 20%+ down payment — no PMI either way, and the VA funding fee adds upfront cost
• Short hold period — the funding fee may not be recovered if you sell within 1–2 years
• Subsequent use without exemption — the 3.30% fee versus a conventional option is worth modeling
• Property condition — VA appraisal requirements may complicate purchases of distressed homes
• Investment property or vacation home — VA requires primary residence occupancy

The clearest way to decide is to get Loan Estimates from VA-approved lenders and conventional lenders and compare the actual numbers side by side, including total upfront costs, monthly payment, and projected break-even on the funding fee.

Active-duty service members receive BAH based on duty station, rank, and dependency status. BAH is excluded from federal taxable income — but it is counted as income for VA loan qualification purposes. Lenders can include it in your qualifying income, which can affect how much you can borrow.

At affordable duty stations, BAH often covers a meaningful portion of a mortgage payment. Use the VA Loan Payment Calculator's BAH comparison feature to see what percentage of your estimated payment your current BAH covers.

Budget conservatively. BAH can help support a mortgage payment, but it should not be treated as a guarantee that buying is the right move. PCS timing, maintenance costs, property tax increases, insurance increases, vacancy risk if you rent after PCS, and selling costs can erode the advantage if your timeline is short or the market is weak. Size the mortgage at what you can afford without BAH, or at a meaningful cushion below BAH — not at the edge of what BAH covers.

No down payment does not mean no cash at closing. The VA funding fee can be financed into the loan, but most other closing costs on a purchase loan cannot. Even with $0 down, plan for:

• Earnest money deposit (refundable if contract falls through under most contingencies, but due at contract)
• Home inspection
• Appraisal fee
• Prepaid property taxes and homeowner's insurance
• Lender origination and title/recording fees
• Optional discount points
• Reserves after closing (some lenders require 2–3 months of payments in savings)
• Repairs, furniture, and move-in costs

Seller credits and lender credits can reduce cash needed at closing, and VA allows sellers to contribute toward closing costs. Ask about these options when negotiating. But go into the process with a realistic cash estimate — not just the down payment.

Entitlement is not how much you can borrow. It is the amount the VA will guarantee to the lender — roughly 25% of the loan amount. With full entitlement (no outstanding VA loans), VA does not impose a loan limit, but the lender still determines how much you can afford based on income, debts, credit, and the property value.

Partial entitlement occurs when you have an active VA loan without full entitlement restoration. In this case, county loan limits and the 25% guaranty calculation may affect whether a down payment is needed on a second VA loan.

Restoring entitlement:

• Standard restoration: Pay off the prior VA loan and sell the property — full entitlement restores automatically
• One-time restoration: Pay off the loan even if you keep the property — available once

The subsequent-use funding fee (3.30% with $0 down) applies when using the benefit again without full entitlement restoration. A disability exemption waives this fee when it applies.

A VA loan is not automatically the right choice for every purchase. Consider comparing conventional financing if:

• You have 20% or more for a down payment — conventional avoids PMI too, and has no funding fee
• You expect to sell within 1–2 years — closing costs and the funding fee may not be recovered before you sell
• Your funding fee is not waived and a conventional loan with PMI is cheaper in total over your expected hold period
• The property has condition issues that may complicate VA appraisal requirements (VA appraisals have minimum property standards)
• You are buying a second home or investment property — VA requires the home to be your primary residence

The best approach is to get actual Loan Estimates from both VA-approved and conventional lenders, then compare total upfront costs, monthly payment, and break-even timeline side by side. The calculator on this site gives you a baseline to start from.

The Interest Rate Reduction Refinance Loan — commonly called the IRRRL or “streamline refinance” — lets existing VA loan borrowers refinance to a lower interest rate with significantly less paperwork than a standard refinance.

Key features:

• Typically no appraisal required
• No income verification or debt-to-income calculation in most cases
• Closing costs can often be rolled into the new loan
• Must result in a lower interest rate, lower payment, or transition from an adjustable-rate to a fixed-rate mortgage
• VA funding fee on an IRRRL: 0.5% of the loan amount (much lower than a purchase fee)
• Disability-rated veterans are exempt from the IRRRL funding fee as well

Important: The IRRRL is only available if you already have a VA loan. It cannot be used to refinance a conventional, FHA, or other non-VA loan into a VA loan. For that, you would need a VA Cash-Out Refinance, which has different requirements and a higher funding fee.

When the IRRRL makes sense: If interest rates have dropped since you got your VA loan, or if you have an adjustable-rate VA loan you want to convert to a fixed rate. The low paperwork and no-appraisal process makes it one of the fastest refinance options available.

MilPayTools does not provide refinance quotes or lender recommendations. Contact VA-approved lenders to compare IRRRL offers.