A mortgage program guaranteed by the U.S. Department of Veterans Affairs, available to eligible veterans, active-duty service members, and surviving spouses. VA loans offer zero down payment, no private mortgage insurance, and competitive interest rates. A VA funding fee (1.25% to 3.3% of the loan) is charged but can be rolled into the loan. VA loans are widely considered one of the best mortgage benefits available.
Why It Matters
VA loans are mortgages guaranteed by the Department of Veterans Affairs, available to active-duty military, veterans (181+ days peacetime, 90+ days wartime), National Guard/Reserve members (6+ years), and surviving spouses. The key advantages: zero down payment, no PMI ever, and competitive rates typically 0.25-0.5% lower than conventional. VA loans are widely considered the best mortgage product available.
The trade-off is the VA funding fee — 2.15% of the loan for first-time use with zero down (1.5% with 5%+ down), increasing to 3.3% for subsequent use. Veterans with service-connected disabilities are exempt from the funding fee entirely. The funding fee can be rolled into the loan. VA loans have no official maximum, but lenders typically follow conforming loan limits for full-entitlement borrowers.
Real-World Example
$350,000 home with VA loan, first use, zero down: Funding fee: $7,525 (2.15%, rolled into loan). Total loan: $357,525. Monthly P&I at 6.0%: $2,144. No PMI. Compared to conventional with 5% down: loan $332,500, PMI $194/month, rate 6.5%. VA monthly: $2,144. Conventional monthly: $2,296. VA saves $152/month despite the higher loan amount.
Pro Tip
If you're eligible for a VA loan, use it — even if you can afford 20% down. The combination of no PMI and lower rates almost always beats conventional, and you preserve your cash for renovations or investments.