What a VA loan does and how to use it
A VA loan is a mortgage you can get through a private lender — a bank, credit union, or mortgage company — that is may provide by the Department of Veterans Affairs. The may provide means the VA promises to cover part of your loss if you stop paying. Because of that promise, lenders offer VA loans with no down payment required, no mortgage insurance, and often a lower interest rate than a conventional mortgage.
To use your VA loan, you find a home you want to buy, get a lender to approve you for the loan amount, and close on the property. The process is similar to a conventional mortgage, but you will need a Certificate of may be able to access from the VA and the lender will order a VA appraisal instead of a standard appraisal. The VA does not lend the money itself — it only guarantees the loan.
Key Takeaways
- You must get a Certificate of may be able to access from the VA before a lender will approve your VA loan, and you can request one online through VA.gov or by mail.
- The lender will order a VA appraisal, which is stricter than a standard appraisal and may require the seller to fix certain safety or structural issues before closing.
- VA loans have no down payment, no mortgage insurance, and a funding fee (usually 2.3% of the loan amount) that you can roll into the loan or pay upfront.
- You can use a VA loan only to buy a home you will live in, not for investment properties or vacation homes.
- Your lender must be VA-approved, and you should shop around because interest rates and fees vary between lenders.
Getting your Certificate of may be able to access
Before any lender will consider your VA loan request, you need a Certificate of may be able to access from the VA. This document proves you served long enough and under the right conditions to may have access to for the benefit. You do not need to explore for the benefit itself — the certificate is just proof that you are may be able to access.
You can request your certificate online at VA.gov using your login credentials, and the VA will email it to you within minutes. If you do not have a VA.gov account, you can create one using your Social Security number and a photo ID. You can also request the certificate by mail by filling out VA Form 26-1880 and sending it to the VA regional office that serves your state.
Once you have the certificate, give it to your lender. Some lenders can verify your may be able to access directly with the VA instead, so ask whether you need to provide the physical certificate or if they can pull it themselves.
Finding a VA-approved lender and getting preapproved
Not every bank or mortgage company offers VA loans. You need a VA-approved lender — one that has been vetted by the VA and follows VA lending rules. You can search for approved lenders on VA.gov, or you can ask your bank or credit union whether they offer VA loans.
Once you find a lender, contact them and ask for a preapproval. Preapproval means the lender reviews your income, credit, and debts and tells you how much they will lend you. You will need to provide pay stubs, tax returns, bank statements, and a list of your debts. The lender will pull your credit report. Preapproval usually takes a few days to a week.
Shop around with at least two or three lenders. VA loan interest rates and fees vary, and even a small difference in rate can save you thousands over the life of the loan. Ask each lender for their current rate, their funding fee, and any other costs they charge.
Understanding the VA funding fee
Most VA loans come with a funding fee, which is a one-time charge that compensates the VA for the risk of guaranteeing your loan. The funding fee is usually 2.3% of the loan amount for a first-time VA home buyer with no down payment. If you are buying a second home with a VA loan, the fee is higher. If you put money down, the fee is lower.
You have two choices: pay the funding fee upfront in cash at closing, or roll it into your loan balance and pay it over time with your mortgage. Most buyers roll it into the loan because they do not have the cash on hand. If you are receiving VA disability compensation, you may be exempt from the funding fee — ask your lender whether you may have access to.
The funding fee is separate from your interest rate and your property taxes. It appears as a line item on your closing disclosure, which the lender must give you at least three days before closing.
The VA appraisal and what it means for you
After your offer is accepted, the lender will order a VA appraisal. This is different from a standard appraisal. A VA appraiser checks not only the home's value but also whether it meets minimum safety and livability standards set by the VA. The appraiser looks for things like working plumbing, safe electrical systems, a sound roof, and no lead paint hazards.
If the appraiser finds problems, they will list them in the appraisal report. Some problems are minor and do not hold up the sale. Others are serious — for example, a roof that is failing or a furnace that does not work — and the seller must fix them before you can close. This is one reason VA loans sometimes take longer than conventional loans: the seller may need time to make repairs.
If the appraised value comes in lower than the purchase price, you have a problem. The VA will not may provide a loan for more than the home is worth. You can renegotiate the price with the seller, put down cash to make up the difference, or walk away. Your lender will explain your options.
Closing on your home
Once the appraisal is approved and your preapproval is solid, you move toward closing. The lender will order a title search to make sure the seller owns the home and there are no liens against it. You will get a Closing Disclosure at least three days before closing day, which lists all the costs: your loan amount, the interest rate, the funding fee, property taxes, homeowners insurance, and any other fees.
On closing day, you will sign documents at a title company or attorney's office. You will sign the promissory note (your promise to repay the loan), the mortgage or deed of trust (the lender's claim on the home if you do not pay), and other paperwork. You will also bring a cashier's check or arrange a wire transfer for your down payment (if any) and closing costs.
After you sign, the lender funds the loan — they send the money to the title company. The title company pays off any existing loans on the home, pays the seller, and records the new deed in your name. You get the keys and you own the home.
What you cannot do with a VA loan
VA loans have one major restriction: you can use them only to buy a home you will live in as your primary residence. You cannot use a VA loan to buy a vacation home, a rental property, or a second home you do not plan to occupy. The VA calls this the occupancy requirement.
If you buy a home with a VA loan and then move and rent it out without paying back the loan, you are in violation of the loan terms. The lender can demand full repayment. Some lenders will allow you to rent out the home if you refinance it into a conventional loan, but that is a separate transaction and you lose the VA benefit.
You also cannot use a VA loan to build a home from scratch, though some VA-approved lenders do offer construction loans. Those work differently and have their own rules. Ask your lender whether they offer VA construction financing if that is what you need.
Frequently Asked Questions
Can I use my VA loan more than once?
Yes. Once you pay off a VA loan, your entitlement is restored and you can use it again. If you still owe on a VA loan, you can use your entitlement a second time, but the lender will count the old loan balance against your borrowing power. Some veterans use their VA loan benefit multiple times over their lifetime.
What if I have bad credit?
VA loans do not require a minimum credit score the way some conventional loans do, but lenders still check your credit and use it to decide whether to approve you and what interest rate to offer. If your credit is poor, you may be denied or offered a higher rate. Some lenders specialize in VA loans for borrowers with credit challenges — shop around.
Do I have to buy a house with my VA loan, or can I use it for a condo or mobile home?
You can use a VA loan to buy a condo or a mobile home, as long as it meets VA standards and you will live in it. Condos must be VA-approved, which means the VA has reviewed the building and its finances. Mobile homes must be on permanent foundations. Ask your lender whether the specific property you want qualifies.
What happens if I cannot pay my VA loan?
If you fall behind on payments, the lender will try to work with you — many offer forbearance or loan modification. If you do not catch up, the lender can foreclose. Because the VA guarantees the loan, the VA may also pursue you for the amount they paid out. Talk to your lender when ready if you are struggling with payments.
Can I refinance my VA loan into a different loan?
Yes. You can refinance a VA loan into another VA loan, a conventional loan, or an FHA loan. A VA-to-VA refinance is called a Interest Rate Reduction Refinance Loan (IRRRL) and has simpler rules and lower costs than refinancing into a different type of loan. Your lender can explain the options.