VA loan is a mortgage program backed by the U.S. Department of Veterans Affairs and available exclusively to eligible veterans, active-duty service members, certain members of the National Guard/Reserves, and some surviving spouses.
Key characteristics:
- No down payment required – You can finance 100% of the home’s value.
- No private mortgage insurance (PMI) – Unlike FHA or conventional loans with less than 20% down, you’ll never pay monthly PMI.
- Competitive interest rates – Often lower than conventional loans.
- Flexible credit guidelines – More forgiving of lower credit scores or past financial issues.
- One-time VA funding fee – Helps keep the program running; can be waived for veterans with service-connected disabilities.
- Primary residence only – Must be used for a home you intend to live in.
Feature | Conventional Loan | FHA Loan | VA Loan |
Who It’s For | Buyers with good to excellent credit | Buyers with lower credit scores or smaller down payments | Eligible veterans, active-duty service members, and some surviving spouses |
Minimum Down Payment | As low as 3% | 3.5% (580+ credit score) | 0% (no down payment required) |
Credit Score Requirement | Typically 620+ | 580+ (with 3.5% down) or 500–579 (with 10% down) | No official minimum, but most lenders look for 580+ |
Mortgage Insurance | Required if <20% down (can be removed later) | Required (MIP for life of loan if <10% down) | No mortgage insurance, but funding fee applies (can be waived for certain veterans) |
Property Requirements | Standard appraisal and condition requirements | Must meet FHA appraisal standards | Must meet VA appraisal standards |
Loan Limits | Conforming limits set by FHFA (varies by county) | FHA limits vary by county | No official loan limit, but must meet VA guidelines |
Refinancing Options | Conventional refinance, cash-out refinance | FHA streamline refinance available | VA IRRRL (streamline) and cash-out options |
Best For | Buyers with strong credit who want competitive rates and flexibility | Buyers who need easier credit qualification and lower upfront costs | Eligible military borrowers seeking no down payment and no MI |
Why it’s beneficial:
- Zero down payment – Makes homeownership possible without years of saving.
- Lower monthly payments – No PMI and better rates keep costs manageable.
- Easier qualification – Especially for those with variable income or past credit challenges.
- Assumable loan – A buyer (if VA-eligible) can take over your low-rate VA loan, which is valuable if rates rise.
- Lifetime benefit – You can use your VA loan entitlement multiple times, not just once.