Everything you need to know about VA home loans
Here’s a snapshot of the key things to know about VA loans:
| WHAT is a VA home loan? | A mortgage where a portion of the loan is backed by the U.S. Department of Veterans Affairs (VA) in order to help make homeownership more attainable. |
| WHO can get a VA home loan? | Eligible veterans, servicemembers, and their families. There are specific eligibility requirements. See specific qualifications to get a VA home loan below for more information. |
| WHEN can you get a VA home loan? | Anytime if you’re eligible; it’s a lifetime benefit of your service, though you will still need to qualify with a VA home loan lender. |
| WHERE can you apply for a VA home loan? | You can work with a VA lender like USAA Bank. Click on request a call to have a representative contact you to discuss options. |
| HOW do you get a VA home loan? | You’ll need to follow a few steps, like with any mortgage, including confirming eligibility, getting approved with a VA lender, and providing any necessary documentation. |
| WHY should you get a VA home loan? | You’ll need to decide if it’s the best fit for you. However, many homeowners who use a VA home loan do not have a down payment or Private Mortgage Insurance (PMI) and may benefit from competitive interest rates. |
What is a VA home loan?
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 loans are able to offer highly competitive terms and benefits. Because the VA wants to help you stay in your home, they offer counseling if you’re worried about making your mortgage payments.
Who can get a VA home loan?
Veterans, servicemembers, and their survivors are eligible for VA home loans. According to the VA, this includes:
- Active-duty servicemembers
- Veterans with discharges that aren’t dishonorable
- National Guard and Reserve servicemembers
- Certain eligible spouses
- Some other uniformed service personnel
Specific qualifications to get a VA home loan
To get a VA loan, you must live in the home being financed by the loan and meet one of the following criteria:
| Military Status | VA loan minimum eligibility criteria (exceptions also noted below this table) |
| Active duty servicemember | Currently on active duty who has served at least 90 continuous days without a break in service |
| Veteran from August 2, 1990 to present day | Served 24 continuous months – or – at least 90 days for which you were called or ordered to active duty |
| September 8, 1980 – August 1, 1990 or October 17, 1981 – August 1, 1990 if you served as an Officer | Served 24 continuous months – or – at least 181 days for which you were called or ordered to active duty |
| May 8, 1975 – September 7, 1980 (post-Vietnam War) or May 8, 1975 – October 16, 1981 if you served as an Officer | 181 continuous days |
| June 27, 1950 – May 7, 1975 or February 28, 1961 – May 7, 1975 if you served in the Republic of Vietnam | 90 total days |
| July 26, 1947 – June 26, 1950 (post-WWII) | 181 continuous days |
| September 16, 1940 – July 25, 1947 (WWII) | 90 total days |
| National Guard and Reserve members serving August 2, 1990 to present (Gulf War) | 90 continuous days of active duty (does not include active duty for training) |
| National Guard and Reserve members serving any other time period | 6 creditable years in the Selected Reserve or National Guard and at least one of following must be true: – Continue to serve in the Selected Reserve – Or discharged honorably – Or placed on the retired list – Or transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable |
The VA also notes some exceptions to the minimum service criteria. You may still be eligible for a VA loan if you were discharged for one of the following reasons:
- Hardship
- Convenience of the government (you must have served at least 20 months of a 2-year enlistment)
- Early out (you must have served 21 months of a 2-year enlistment)
- Reduction in force
- Certain medical conditions
- A service-connected disability (a disability related to military service)
You’ll want to verify your eligibility for a VA home loan and obtain your Certificate of Eligibility (COE) from the VA. A lender like USAA Bank may be able to help you with the process of obtaining your COE.
VA home loan benefits: comparing to other mortgage options
VA home loans offer many advantages for qualified veterans and service members, including the potential for no down payment, no PMI, competitive interest rates, and low fees. You will still have to qualify with a VA home loan lender like USAA Bank in order to confirm your exact terms, loan approval, down payment, and monthly payments.
VA loans vs. Conventional loans
How does a VA home loan usually compare to other traditional home loans? Here are some features to consider when comparing loans overall:
| VA home loans | Conventional loans | |
| Down payment requirements | $0 down payment for qualified borrowers | As low as 3% for qualified borrowers |
| Private Mortgage Insurance (PMI) | No PMI | Only if putting less than 20% down |
| Lender Fees | Limits exist on Lender Fees | May not be limits on Lender Fees |
Down payment
The VA notes that over 90% of VA home loans have no down payment. Alternatively, many conventional mortgages require up to 20% down and even if you can get approved for a lower down payment, you’ll have to pay PMI.
PMI
If you aren’t putting 20% down on your home purchase, usually your lender will require PMI, which is a monthly payment added to your loan. With a VA home loan, there’s no PMI, so this can save you a substantial amount of money over time.
Interest rates
Interest rates will fluctuate based on the market, but oftentimes if you’re eligible for a VA home loan, you may get approved with lower interest rates. This could save you money over the lifetime of your mortgage.
Lender fees
VA loans limit lender fees to 1% of your loan amount, unlike other mortgages where fees can be significantly higher and vary widely based on lender and location. You’ll still have additional closing costs, such as appraisal, credit report, and title fees which are not included in the 1% limit. Speak with a lender like USAA Bank to understand the various costs and fees.
While closing costs are typically your responsibility, you can often negotiate with the seller to pay a portion of them as part of your home purchase agreement.
Funding fee
VA home loans have a funding fee to cover the VA’s administrative costs. This fee, set by Congress, varies depending on whether it’s your first VA loan and your down payment amount. Your lender can help to confirm the fee.
Speak with your lending team to discuss your options for getting a VA home loan.
What are the different types of VA loans available?
| VA Purchase Loan Use it to: buy a home Key benefits: $0 down, no PMI, lower closing costs and fees. | VA IRRRL Interest Rate Reduction Refinance Loan Use it to: refinance a current VA loan to a lower rate or term Key benefits: simple, low-cost refi option. | VA Jumbo Loan Use it to: buy a home that costs up to $3 million Key benefits: $0 down payment options may still apply for higher loan amounts. |
You can speak with a lender like USAA Bank to learn about your options and which one might be the right fit for you (they can also share information about other mortgages available).
The VA home loan process
Your exact process may vary slightly based on where you’re at in your homebuying journey. These are the most common steps when getting a VA home loan:
1. Get prequalified for a VA home loan
What: Speak with a VA lender like USAA Bank to get prequalified
Why: Getting prequalified can help you confidently make an offer on a home
2. Obtain your COE
What: Confirm your eligibility with the proper documentation
Why: Your lender needs this to process your VA home loan application
3. Apply for your VA loan
What: Get back in touch with your USAA Bank lending team once you’ve identified a property you intend to purchase.
Why: Officially apply and receive a loan estimate with the terms and fees for your loan.
4. Get your lender any additional documentation needed
What: Common documents may include bank statements, pay stubs, or other items to verify income and employment history
Why: VA and VA lenders have minimum requirements for documenting your ability to qualify for a VA loan.
5. Finalize and close on your VA home loan
Finalize things with your lender and close on your loan. Congrats on your new home! If you closed with USAA Bank, be on the lookout for a post-closing package from us and should your move in be delayed, let your Loan Officer know.
How do you get started?
If you think a VA home loan might be right for you or even if you just have a few questions, you can speak to your loan officer at USAA Bank. If you’re interested in learning about what options are available to you, click on request a call and we’ll be in touch to discuss how to save with the benefits you’ve earned.
Tools and resources provided by USAA Federal Savings Bank should be considered general advice and for informational purposes only. All information is subject to change without notice and may not apply to all members. Products, services or features mentioned may not be offered by USAA Federal Savings Bank. The information contained is not intended to represent any endorsement, expressed or implied, by USAA Federal Savings Bank or any affiliates.
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