VA loans are a mortgage option available exclusively to veterans, active-duty service members, and eligible surviving spouses. These loans, guaranteed by the Department of Veterans Affairs, allow borrowers to purchase homes with no down payment, no private mortgage insurance (PMI), and often at lower interest rates than conventional loans. The VA guarantees a portion of the loan, which helps lenders provide more favorable terms to borrowers. VA loans are designed to make homeownership more accessible to those who have served the country.

One of the most attractive features of VA loans is that there is no official loan limit as of 2020 for veterans who have full entitlement. However, for borrowers with partial entitlement, or those looking to buy a home in a high-cost area, county limits will apply. In most U.S. counties, the conforming loan limit for VA loans is $726,200, but in high-cost areas, the limit can go up to $1,089,300. VA loans also allow the option to finance up to 100% of the home’s value, eliminating the need for a down payment altogether in many cases. This is particularly beneficial for buyers who may not have saved enough for a large down payment.

Interest rates for VA loans are typically lower than conventional and FHA loans, often ranging between 4-5%, though these can fluctuate based on market conditions and individual borrower profiles. Borrowers also benefit from the absence of PMI, which is a requirement for conventional loans with less than a 20% down payment. While VA loans do not have monthly mortgage insurance, there is a funding fee required, which can range from 1.25% to 3.6% of the loan amount, depending on the borrower’s military service and whether they are making a down payment. This fee can be rolled into the loan itself, reducing upfront costs.

To qualify for a VA loan, borrowers must meet service eligibility requirements and obtain a Certificate of Eligibility (COE) from the VA. Additionally, they must occupy the home as their primary residence and demonstrate the ability to make monthly payments based on their income and DTI ratio. VA loans are available for single-family homes, condominiums, and some multi-family properties, provided the borrower occupies one of the units. They cannot be used for investment properties or vacation homes. However, VA loans are one of the most flexible and affordable mortgage options available for those who qualify.