VA Home Loan Questions (FAQ)

A VA home loan is a type of mortgage backed by the VA for eligible veterans, servicemembers, and their survivors. The VA began backing mortgages in 1944 as part of the G.I. Bill to help veterans, servicemembers, and their families buy homes and stay in them.

The VA-backing, also known as a ‘VA home loan guaranty,’ means that the VA and your lender have an agreement that the VA will reimburse them if you default on your loan and it goes into foreclosure. Because of this guaranty, VA lenders are able to offer highly competitive terms and benefits. Additionally, since the VA wants to help you stay in your home, they offer counseling if you’re worried about making your mortgage payments.

It can be an existing single-family home, townhouse or condo, or new construction. It must be your primary residence – not a vacation home or investment property. Lenders and the VA may have restrictions on the types of properties they allow, such as Condos needing to be on the VA approved list, so it is recommended to check with them before shopping for a home.

The VA has high standards on the condition of the property, you may have a harder time using a VA loan for a major restoration project. Some lenders may offer VA programs for homes that need alterations or repairs.

Yes. In some cases, you can reuse your VA loan benefits if you’ve sold or paid off your VA loan, or if you have leftover entitlement. For more eligibility questions, speak to a loan officer.

It’s a one-time, non-refundable VA fee you generally have to pay when you get a VA-backed mortgage. In most cases, the VA funding fee can be rolled into the loan. But keep in mind it will add to your overall loan balance. The fee typically ranges from 1.25% to 3.3% of the loan amount. The exact fee amount is based on the loan purpose, your down payment amount, your service history and if you’ve used your VA loan eligibility before.

Some are exempt from the fee, including:

– Those who get VA compensation for a service-connected disability.

– The surviving spouse of a veteran who died in service or from a service-connected disability.

– Active-duty Purple Heart recipients.

As with any mortgage, when considering a VA loan, you’ll want to understand the terms and fees (such as funding fee and closing costs), down payment needed, the interest rate, length of the loan, and your lender’s experience originating VA loans. 

Like other mortgages, VA loan interest rates depend on a few factors, including the current Federal Reserve interest rate, your credit history and credit scores, your down payment, the total amount you need to finance when buying your home, and the length of your VA home loan. Check with your lender to understand what options are available to you.

The VA does not set a specific minimum credit score to be eligible for a VA loan, however, most VA home loan lenders like USAA Bank do have their own minimum credit score requirements. Knowing where your credit stands before applying for a VA loan (or any mortgage or loan) is also a good idea, including checking your credit report and credit scores.

In order to refinance your VA loan, you must meet VA loan eligibility requirements. Basically, if you have a VA home loan, you can usually refinance it (though some restrictions or limits may apply).

A trusted VA lender like USAA Bank can help you understand details related to eligibility and what terms and interest rates you may qualify for when refinancing your home and answer any questions.

If you’re looking to refinance and pull money out to help meet various financial goals, a cash-out VA loan refinance may be a fit for you. VA cash-out refinance loans offer a couple of key benefits, including:

– Refinance up to 90% of your home’s value.
– An option to finance the VA funding fee.

An IRRRL is the VA loan version of a more traditional refinance – when you’re looking to take advantage of a lower interest rate or adjust terms with an existing VA home loan. It is sometimes also called a “streamline” refinance by the VA and offers benefits, including:

– Refinance up to 100% of your home’s value.
– An option to finance the VA funding fee.
– Available in a variety of terms (e.g. different lengths).

According to the Department of Veterans Affairs (VA), to be eligible to get a VA IRRRL, all of the following must be true:

– You are using the IRRRL to refinance your existing VA-backed home loan.
– You can certify that you currently live in or used to live in the home covered by the loan.
– If you have a second mortgage on your home, then that loan holder must agree to make your new VA-backed loan the first mortgage.
– Provides a net tangible benefit, or is in the financial interest of the Veteran.

The COE confirms that you’ve met the service requirements needed to get a VA loan. You’ll need one every time you apply for a VA loan. For more information, visit the U.S. Department of Veterans Affairs website.

You can request a COE online or by mail. You can also ask your lender to help you get a COE.

This is a common question, but it’s more accurately called restoring your VA loan entitlement. You may be able to “restore” and reuse your entitlement to buy another home using a VA direct or VA-backed loan if you meet at least one of the following conditions:

– You sold the home you bought with a VA loan and have paid that loan in full.
– A qualified Veteran agrees to assume your loan and substitute their entitlement for the same amount of entitlement you used originally.
– You’ve paid off your previous VA loan in full, but still own the home.

To request restoring your entitlement, you’ll need to complete a Request for a Certificate of Eligibility (VA Form 26-1880) and send it to the VA regional loan center for your state.

In some cases, you may be eligible to apply for a VA loan even if you don’t meet the minimum service requirements. You may still be able to get a Certificate of Eligibility (COE) if you were discharged for one of these reasons:

– Hardship
– The convenience of the government – you must have served at least 20 months of a two-year enlistment
– Early out – you must have served 21 months of a two-year enlistment
– Reduction in force
– Certain medical conditions
– A service-connected disability, which is a disability related to your military service

Your decision to rent or buy will depend on your personal situation – you’ll want to consider the costs of each and what it means when you get PCS orders if you buy a home. You’ll either need to sell your home, in which case your return on your investment will depend on market conditions or, if you’re able to, you could consider keeping the home and renting it out to someone else (potentially another servicemember looking for off-base housing). If you are considering buying a home, you may want to research VA loans , since they may make home ownership more affordable with little to no money down and capped closing costs.

Both living in military housing and getting housing off base have their own benefits. On-base housing is usually more affordable and you’ll have easy access to the base and community. However, off base, you’ll likely have more options for the type of housing you can choose. Living off base you may also get a BAH. Additionally, on base housing may fill up, so you may be required to live off base. 

That depends. Most active-duty servicemembers get PCS orders every 2-4 years. Of course, if you’re a member of the National Guard or Army Reserves, you likely won’t be impacted or need to move. There is a Department of Defense-funded program called Military One Source, which helps provide various free resources and support services, including help during relocations. USAA also offers members resources, such as a personalized checklist for military moves.

Yes, lenders generally count BAH as income when determining VA loan eligibility, which can improve your borrowing power.

It depends on your location and home price. BAH may fully cover your mortgage payment in some areas, while you may need additional income in high-cost regions.

No, BAH is intended for your primary residence. So, it typically cannot be used to qualify for a mortgage on a second home or investment property.

If your BAH decreases due to reassignment or changes in dependents, you’ll want to ensure you can still afford a mortgage. If you anticipate being PCS’d soon, you may also want to assess if a VA home loan is the right mortgage option for you since VA loans are intended to be for your primary residence. For instance, in some cases, you may consider renting instead of purchasing a home.

There are three main things you can do to maximize the use of your BAH when buying a home:

1. Choose a home within your BAH budget.
2. Ask your lender if you’re eligible to qualify for VA loan benefits like no down payment. You’ll also have no private mortgage insurance (PMI) with a VA loan.
3. Speak with your USAA Bank home loan officer to understand your options.

No specific minimum credit score is needed to get a VA home loan. However, most VA home loan lenders like USAA Bank do have their own minimum requirements. Knowing where your credit stands before applying for a VA loan (or any mortgage or loan) is also a good idea, including checking your credit report and credit scores. There are basic steps you can take to get your credit in better shape if needed but seeing an impact on your credit scores will take time. So, checking  your credit report and credit scores well ahead of your homebuying process will be helpful.