VA Home Loans: The Complete Guide
You served your country. Your VA home loan benefit is one of the most powerful financial tools available to any American — $0 down, no PMI, competitive rates, and a reusable lifetime benefit. Here's everything you need to know.
Coastal Funding Corporation proudly specializes in VA loans and is honored to serve veterans, active duty service members, and surviving spouses in FL, SC & TN.
A Benefit Earned Through Service
A VA home loan is a mortgage benefit provided by the U.S. Department of Veterans Affairs (VA) to eligible veterans, active duty service members, National Guard and Reserve members, and surviving spouses. The VA does not lend money directly — instead, it guarantees a portion of the loan made by a VA-approved private lender like Coastal Funding Corporation.
Because the VA backs the loan, lenders can offer terms that simply aren't available anywhere else: no down payment, no private mortgage insurance, competitive interest rates, and limited closing costs. These advantages exist because of your service — they are not a government handout, they are a benefit you earned.
The VA home loan program was established by the Servicemen's Readjustment Act of 1944 (the GI Bill) and has helped over 28 million veterans and service members become homeowners. The program has been continuously improved — most recently by the Blue Water Navy Vietnam Veterans Act of 2019, which eliminated loan limits for veterans with full entitlement starting January 1, 2020.
Unlike FHA and conventional loans, the VA home loan benefit is a lifetime, reusable benefit. You can use it multiple times — to buy, build, improve, or refinance — as long as you meet eligibility requirements and have remaining entitlement.
How the VA Guarantee Works
VA vs. HUD/FHA: Key Difference
VA Loan Oversight
benefits.va.gov/homeloans
The Four VA Loan Programs
va.gov/housing-assistanceThe VA offers four distinct home loan programs. All require the property to be the veteran's primary residence (except the NADL for certain trust land situations). Here's a full breakdown of each.
VA Purchase Loan
The flagship VA benefit. Purchase a primary residence with no down payment (as long as the sales price doesn't exceed the appraised value), no PMI, and competitive interest rates. Available for single-family homes (1–4 units), VA-approved condos, manufactured homes, and new construction. The seller can pay all closing costs.
- No down payment required (full entitlement)
- No private mortgage insurance (PMI)
- No loan limits with full entitlement (2020+)
- Seller can pay all closing costs
- 1–4 unit properties, condos, manufactured homes
- New construction eligible
- Assumable by another eligible veteran
IRRRL — Interest Rate Reduction Refinance Loan
Also called the VA Streamline Refinance. Allows existing VA loan holders to refinance into a lower interest rate with minimal paperwork and no appraisal or credit underwriting required in most cases. Must result in a lower rate (or switch from ARM to fixed). Cannot take cash out. Fastest, lowest-cost refinance available.
- No appraisal required in most cases
- No income/employment verification required
- Must have existing VA-guaranteed loan
- Must result in lower rate or ARM → fixed
- No cash-out permitted
- Funding fee: 0.5% (lowest of all VA loans)
- Can roll closing costs into loan balance
VA Cash-Out Refinance
Allows veterans to refinance any existing mortgage (VA or non-VA) and take cash out of their home equity — up to 100% LTV in some cases. Can also be used to convert a non-VA loan into a VA-backed loan, even without taking cash out. Full appraisal and credit underwriting required.
- Refinance VA or non-VA loans into VA
- Cash out up to 90–100% LTV (lender dependent)
- Full appraisal and credit qualifying required
- Use cash for debt payoff, home improvements, education
- Eliminates PMI when converting from conventional
- Standard VA funding fee applies
- Primary residence only
Native American Direct Loan (NADL)
A direct loan from the VA (not a guarantee) for eligible Native American veterans to purchase, construct, or improve a home on Federal Trust Land, or to reduce the interest rate on an existing NADL. The tribal organization must participate in the VA direct loan program. Offers low-interest, 30-year fixed mortgages with no down payment.
- Direct VA loan (not a guarantee)
- Federal Trust Land only
- Tribal organization must participate
- No down payment required
- No PMI
- Low-interest 30-year fixed
- Reusable benefit
Specially Adapted Housing (SAH) Grant
Not a loan — a grant for veterans with certain service-connected disabilities to purchase or build an adapted home, or to modify an existing home to accommodate their disability. Two types: SAH (up to $117,014 in 2025) for severe mobility disabilities, and SHA (up to $23,444) for other qualifying disabilities. Does not need to be repaid.
- SAH grant: up to $117,014 (2025)
- SHA grant: up to $23,444 (2025)
- Service-connected disability required
- Does not need to be repaid
- Can be used up to 6 times
- Can be combined with VA purchase loan
- Apply via VA Form 26-4555
VA Temporary Buydown
A newer VA option allowing sellers, builders, or lenders to temporarily reduce the borrower's interest rate for the first 1–3 years of the loan (e.g., a 2-1 buydown: rate is 2% lower in year 1, 1% lower in year 2, then full rate from year 3). Reduces initial monthly payments and can make homeownership more affordable in a high-rate environment.
- Seller, builder, or lender funded
- 1-0, 2-1, or 3-2-1 buydown structures
- Reduces initial monthly payments
- Funds held in escrow account
- Unused funds returned to borrower if refinanced
- Available on VA purchase loans
- Pairs well with IRRRL when rates drop
VA Loan Eligibility Requirements
VA loan eligibility is based on your military service history. You must meet minimum service requirements and obtain a Certificate of Eligibility (COE) — the official document that proves your entitlement to a VA lender. CFC can pull your COE directly through VA's automated system in most cases.
Minimum Service Requirements
| Service Category | Minimum Service Requirement |
|---|---|
| Active Duty (wartime) | 90 consecutive days of active service |
| Active Duty (peacetime) | 181 days of continuous active service |
| Active Duty (current) | Currently on active duty for 90+ days |
| National Guard / Reserve (post-Aug 1990) | 90 days of active service under Title 10 orders |
| National Guard / Reserve (6-year service) | 6 years of service + honorable discharge or still serving |
| National Guard (Title 32) | 90 days active including 30 consecutive days under Sections 316, 502, 503, 504, or 505 |
| Surviving Spouse | Spouse of veteran who died in service or from service-connected disability; not remarried (or remarried after age 57) |
| Surviving Spouse (MIA/POW) | Spouse of service member missing in action or prisoner of war |
Service must have been under conditions other than dishonorable. Certain discharges may require a character of discharge review. Contact CFC or the VA for guidance on your specific situation.
Certificate of Eligibility (COE)
Credit Score
Debt-to-Income (DTI)
Residual Income
Property Requirements (MPRs)
Occupancy & Prior Events
Understanding the VA Funding Fee
The VA funding fee is a one-time fee paid to the VA that helps sustain the loan guarantee program for future veterans. It replaces the mortgage insurance that conventional and FHA borrowers pay — and unlike monthly PMI, it's a single charge that can be financed into the loan. Many veterans are exempt from the funding fee entirely.
Who Is Exempt?
- Veterans receiving VA compensation for a service-connected disability
- Veterans entitled to receive VA compensation but receiving retirement or active duty pay instead
- Surviving spouses of veterans who died in service or from a service-connected disability
- Service members with a proposed or memorandum rating of 10%+ disability
- Purple Heart recipients on active duty
If you have a disability rating, always verify your exemption status before closing — lenders must check VA records.
Funding Fee vs. PMI: The Math
On a $350,000 loan, first-time VA use with 0% down:
VA Funding Fee
2.15% × $350,000 = $7,525 (one-time, can be financed)
Monthly PMI cost: $0
Conventional (5% down, 680 credit)
PMI ≈ 0.8%/yr = $233/month
PMI over 5 years (until 20% equity): ~$14,000+
The VA funding fee is typically recovered within 3–4 years compared to conventional PMI costs — and VA borrowers pay nothing monthly for mortgage insurance.
2025 VA Funding Fee Rates — Purchase & Construction Loans
| Loan Type / Use | Down Payment | First Use | Subsequent Use |
|---|---|---|---|
| Purchase / Construction | Less than 5% | 2.15% | 3.30% |
| Purchase / Construction | 5% or more | 1.50% | 1.50% |
| Purchase / Construction | 10% or more | 1.25% | 1.25% |
| Cash-Out Refinance | N/A | 2.15% | 3.30% |
| IRRRL (Streamline Refi) | N/A | 0.50% | 0.50% |
| NADL (Native American Direct) | N/A | 1.25% | 1.25% |
| Assumption of VA Loan | N/A | 0.50% | 0.50% |
| Manufactured Home (not permanently affixed) | N/A | 1.00% | 1.00% |
Funding fee can be paid at closing or financed into the loan. Rates effective for loans closed on or after April 7, 2023. Exempt borrowers pay 0%.
Benefits, Disadvantages & Considerations
Benefits
- No down payment required — the only major loan type (besides USDA) with true $0 down for any purchase price
- No private mortgage insurance (PMI) — ever. Saves hundreds per month vs. conventional or FHA
- No loan limits with full entitlement — buy any price home with $0 down (since Jan 1, 2020)
- Competitive interest rates — VA rates are typically 0.25–0.5% lower than conventional rates
- Limited closing costs — VA restricts what lenders can charge; seller can pay all closing costs
- No prepayment penalty — pay off your mortgage early without any penalty
- Reusable lifetime benefit — use it multiple times throughout your life
- Assumable loan — another eligible veteran can assume your VA loan, potentially at your lower rate
- Shorter waiting periods after bankruptcy (2 yr) and foreclosure (2 yr) than conventional (4 yr / 7 yr)
- VA IRRRL streamline refinance — fastest, lowest-cost refinance available when rates drop
- Foreclosure avoidance assistance — VA advocates on your behalf with servicers if you face hardship
- No minimum credit score set by VA — lender overlays apply but VA itself has no floor
Disadvantages
- VA funding fee required (unless exempt) — 2.15% first use, 3.30% subsequent use with 0% down
- Primary residence only — cannot use VA loan for investment properties or second homes
- VA appraisal required — VA-assigned appraiser, not lender-selected; can slow the process
- Stricter property condition requirements (MPRs) — sellers may be reluctant to accept VA offers on fixer-uppers
- Condos must be on VA-approved list — many condo associations are not VA-approved
- Funding fee increases on subsequent use — 3.30% for 0% down after first use adds up
- Seller perception — some sellers in competitive markets prefer conventional offers (unfounded but real)
- Entitlement complexity — partial entitlement situations (prior VA loan not paid off) can limit $0 down benefit
- Not available for investment properties — limits real estate investing strategies
Watch Out For
- Verify your funding fee exemption before closing — if you have a disability rating, confirm it's reflected in VA records to avoid being charged unnecessarily
- Condo eligibility — always check VA's condo approval list before making an offer; non-approved projects require a lengthy approval process
- Entitlement after foreclosure — if a prior VA loan was foreclosed and the VA paid a claim, your entitlement may be reduced until the claim is repaid
- VA loan assumption — if you allow a non-veteran to assume your VA loan, your entitlement remains tied up until the loan is paid off
- Property condition — get a home inspection before making a VA offer; required MPR repairs can kill deals or delay closing
- Seller education — work with a realtor who can educate sellers on VA loan myths; VA offers are as strong as conventional when properly presented
- Subsequent use funding fee — if you've used your VA benefit before, the 3.30% fee is significant; consider putting 5%+ down to reduce it to 1.50%
VA vs. Conventional vs. FHA vs. USDA
For eligible veterans, VA is almost always the best financial deal — especially for borrowers with less than 20% to put down. Here's how it stacks up against every other major loan type.
| Feature | VA | Conventional | FHA | USDA |
|---|---|---|---|---|
| Min. down payment | 0% | 3% | 3.5% (580+ credit) | 0% |
| Mortgage insurance | None (ever) | PMI until 20% equity | MIP life of loan (<10% down) | Annual fee 0.35% |
| Upfront fee | 1.25%–3.30% funding fee | None | 1.75% UFMIP | 1.0% guarantee fee |
| Min. credit score | No VA minimum (lender ~580+) | 620 | 580 (3.5% down) | No minimum (typically 640) |
| Max DTI | 41% guideline (residual income test) | 50% (with AUS) | 57% (with AUS) | 44% (with AUS) |
| Loan limits | No limit (full entitlement) | $806,500 conforming | $524,225–$1,209,750 | No limit (income/area) |
| Property types | Primary only (1–4 units) | Primary, 2nd home, investment | Primary only (1–4 units) | Primary only (rural) |
| Seller concessions | Up to 4% | 3–9% (LTV dependent) | Up to 6% | Up to 6% |
| Streamline refi | Yes (IRRRL) | No | Yes (FHA Streamline) | Yes (USDA Streamline) |
| Assumable | Yes (eligible veteran) | No | Yes | No |
| Prepayment penalty | None | None | None | None |
| Eligibility | Veterans / active duty / surviving spouses | Any qualified borrower | Any qualified borrower | Rural/suburban; income limits |
How to Get a VA Home Loan
The VA loan process is similar to a conventional mortgage, with a few additional steps. CFC handles the COE request and VA-specific paperwork on your behalf — you focus on finding your home.
Confirm Eligibility
Verify you meet the service requirements for your branch and service period. Gather your DD-214 (discharge papers) or Statement of Service if still active. Surviving spouses should have the veteran's death certificate and VA Form 21P-534EZ.
Choose a VA-Approved Lender
Work with a VA-approved lender like Coastal Funding Corporation. Not all lenders specialize in VA loans — choose one with experience navigating VA appraisals, entitlement calculations, and the COE process.
Obtain Your COE
Your lender requests your Certificate of Eligibility through VA's automated system (WebLGY) — most are issued instantly. If not available electronically, you can apply at VA.gov or by mailing VA Form 26-1880. CFC handles this for you.
Get Pre-Approved
Submit your income, employment, credit, and asset documentation for pre-approval. Your lender will calculate your maximum loan amount and issue a pre-approval letter. This is your green light to shop for a home.
Find Your Home & Sign Contract
Work with a realtor familiar with VA loans. Once you find a home and have a signed purchase contract, your lender orders the VA appraisal. The VA assigns an approved fee appraiser — you cannot choose your own.
Underwriting & Close
Your lender submits the file for VA underwriting. Once approved, you'll receive a Closing Disclosure and schedule your closing. The VA funding fee is paid at closing or financed into the loan. You receive the keys — congratulations, veteran homeowner.
VA Loan Scenarios: Is It Right for You?
First-Time Veteran Homebuyer with Limited Savings
Best fit$0 down and no PMI makes homeownership achievable with minimal cash. Combined with seller-paid closing costs, a veteran can purchase a home with virtually no out-of-pocket expense. No other loan type matches this for eligible borrowers.
Veteran with Credit Score 580–679
Best fitVA's flexible credit approach and residual income test often qualify veterans that conventional lenders decline. The absence of PMI also means the monthly payment is lower than FHA at the same loan amount, even with a lower credit score.
Active Duty Service Member Buying Near Base
Best fitVA loans are ideal for active duty purchases — no down payment preserves savings for PCS moves, and the IRRRL streamline refinance makes it easy to lower the rate if you stay in the home. Occupancy rules accommodate active duty deployments.
Surviving Spouse of a Veteran
Best fitEligible surviving spouses receive the full VA loan benefit — $0 down, no PMI, competitive rates. This is one of the most underutilized VA benefits. If your spouse died in service or from a service-connected disability, you likely qualify.
Veteran with Existing VA Loan Looking to Refinance
Best fitThe IRRRL is the fastest, lowest-cost refinance available. No appraisal, minimal documentation, 0.5% funding fee. If rates have dropped since you closed, an IRRRL can save hundreds per month with minimal hassle.
Veteran Wanting to Access Home Equity
Good fitVA cash-out refinance allows up to 90–100% LTV cash-out — higher than conventional (80%) or FHA (80%). Useful for debt consolidation, home improvements, or education. Also converts non-VA loans into VA loans, eliminating PMI.
Veteran Buying a 2–4 Unit Property
Good fitVA allows purchase of 2–4 unit properties with $0 down as long as the veteran occupies one unit. Rental income from other units can help qualify. A powerful house-hacking strategy with no down payment.
Veteran with 20%+ Down and 740+ Credit
Compare BothConventional may be worth comparing — no funding fee, and at 20% down there's no PMI either. Run the numbers: VA's lower rate often still wins over the loan term, but the funding fee math changes when you have a large down payment.
VA Loan FAQ
Can I use my VA loan benefit more than once?
Yes — the VA home loan is a lifetime, reusable benefit. You can use it again after selling your home and paying off the VA loan (entitlement is restored), or even while you still have an existing VA loan if you have remaining entitlement. There is no limit to the number of times you can use it.
What is VA entitlement and how does it work?
Entitlement is the dollar amount the VA will guarantee on your loan. Basic entitlement is $36,000; bonus entitlement brings the total to 25% of the conforming loan limit ($201,625 in 2025). With full entitlement (no prior VA loan outstanding), there is no loan limit and no down payment required. With partial entitlement (prior VA loan not paid off), you may need a down payment on a second VA loan.
Can I buy a condo with a VA loan?
Yes, but the condo project must be on VA's approved condominium list. Many associations are not approved. Check the VA Condo Lookup tool at benefits.va.gov. Some lenders can process a "spot approval" for individual units in non-approved projects, but this is more complex and not all lenders offer it.
What are VA loan limits in Florida, South Carolina, and Tennessee?
Since January 1, 2020, veterans with full entitlement have no VA loan limit — you can borrow any amount with $0 down. Loan limits only apply to veterans with partial entitlement (prior VA loan not fully paid off). In most FL, SC, and TN counties, the 2025 conforming limit is $806,500, which determines the bonus entitlement calculation for partial entitlement situations.
Do I need a down payment for a VA loan?
No — with full entitlement, you can purchase any home with $0 down as long as the purchase price does not exceed the appraised value. If the purchase price exceeds the appraised value, you must pay the difference in cash. With partial entitlement, a down payment may be required to cover the gap between your remaining entitlement and 25% of the loan amount.
Can I use a VA loan to buy a fixer-upper?
VA loans require the property to meet Minimum Property Requirements (MPRs) at the time of closing — meaning significant repairs must be completed before you can close. For properties needing major work, a VA Renovation Loan (offered by some lenders) or a conventional renovation loan may be a better fit. See our /va-appraisals page for details on MPRs.
What is the VA appraisal process and how long does it take?
The VA assigns an approved fee appraiser from a regional roster — you cannot choose your own. The appraiser evaluates both value and property condition (MPRs). Turnaround times vary by market: typically 7–14 days in most FL, SC, and TN markets. The VA sets maximum appraisal fees by state — see our /va-appraisals page for current fee schedules.
Can a surviving spouse use the VA home loan benefit?
Yes. Surviving spouses of veterans who died in service or from a service-connected disability are eligible for the full VA home loan benefit — $0 down, no PMI, competitive rates. The surviving spouse must not have remarried (or must have remarried after age 57). This is one of the most underutilized VA benefits.
You Served. You've Earned This.
Coastal Funding Corporation is proud to specialize in VA loans and honored to serve the men and women who served our country. We'll help you use every dollar of your VA benefit — no broker fees, no pressure.
Serving veterans and active duty service members in Florida, South Carolina & Tennessee.
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