What Is a VA Loan?
A VA loan is a mortgage benefit for eligible veterans, active-duty service members, and surviving spouses, backed by the U.S. Department of Veterans Affairs. VA loans offer some of the best terms available in the mortgage market — no down payment required, no PMI, competitive interest rates, and no prepayment penalties.
VA Loan Benefits vs Other Loan Types
| Benefit | VA Loan | FHA | Conventional |
|---|---|---|---|
| Down payment | 0% | 3.5% | 3-20% |
| PMI/MIP required | None | Life of loan (under 10% down) | Until ~20% equity |
| Credit score minimum | No VA minimum (lenders ~620) | 580 | 620-640 |
| Funding/Insurance fee | 1.25-3.3% | 1.75% upfront | None |
| Interest rates | Typically lowest | Moderate | Varies |
VA vs Conventional: Which Actually Wins?
If you're eligible for a VA loan, it usually wins — but not always, and it's worth understanding why instead of taking anyone's word for it. The comparison comes down to three things:
Funding fee vs. PMI
These are two different answers to the same lender problem (low down payment = more risk). The VA charges you once — a funding fee you can roll into the loan. Conventional loans with less than 20% down charge you every month — PMI typically runs 0.3%–1.5% of the loan amount per year until you reach roughly 20% equity, which can take years. On a $350,000 loan, even a modest 0.5% PMI rate is about $146/month, every month. The one-time VA fee almost always costs less than years of PMI.
Down payment
VA: $0 required. Conventional: 3% minimum for some first-time buyer programs, 5% more typically — and you need 20% down to escape PMI entirely. On a $350,000 home, that 20% is $70,000 in cash. The VA loan's real superpower isn't the fee structure; it's that you can buy years sooner because you don't have to save that pile first.
Credit flexibility
The VA sets no minimum credit score — it evaluates borrowers on residual income (money left over each month after major obligations), which is a more forgiving and frankly more sensible test. Most lenders overlay their own ~620 minimum, but VA underwriting is consistently more flexible than conventional, where your rate gets meaningfully worse as your score drops.
2026 VA Funding Fee Table
The VA funding fee is a one-time fee that helps fund the VA loan program. It is not insurance — it goes to the VA, not a private company. Two things decide your rate: how much you put down, and whether you've used a VA loan before. Here are the current 2026 rates for purchase loans (unchanged from 2025 — the last actual rate change was in 2023):
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5% – 9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Notice something? The "subsequent use penalty" completely disappears once you put 5% down. If you've used your VA benefit before and you have some cash available, hitting that 5% threshold cuts your fee from 3.30% to 1.50% — on a $350,000 home, that's roughly $6,000 back in your pocket.
One detail most calculators get wrong: the fee applies to your loan amount, not the purchase price. So a down payment saves you twice — it shrinks the base the fee is charged on and can drop you into a lower fee tier.
Who pays nothing: Veterans receiving VA disability compensation (any rating), surviving spouses receiving Dependency and Indemnity Compensation (DIC), and Purple Heart recipients on active duty are fully exempt from the funding fee. If that's you, select "Exempt" in the calculator above.
The funding fee is almost always rolled into the loan amount rather than paid at closing, which increases your loan balance slightly but keeps your out-of-pocket costs at closing minimal.
Zero Down on a VA Loan: A Real Example
Let's walk through exactly what $0 down looks like, because "no down payment" sounds too good to be true until you see the math. Say you're buying a $350,000 home with your first VA loan and putting nothing down:
- Base loan amount: $350,000 (the full purchase price — nothing down)
- VA funding fee: 2.15% × $350,000 = $7,525, rolled into the loan
- Total loan amount: $357,525
- Principal & interest: about $2,260/month at a 6.5% example rate over 30 years (VA rates typically run a bit below the conventional average, so plug in your actual quote above)
- With taxes and insurance (say $300 + $130/month): about $2,690/month total
The trade-off is honest and simple: you keep your savings in the bank, but you start with slightly negative equity — you owe $357,525 on a $350,000 home from day one. That gap closes as you pay down principal and the home (hopefully) appreciates, but if you might sell within a year or two, it's worth knowing. And remember what you're not paying: a conventional loan with 0–5% down would charge PMI every single month. A VA loan never does.
VA Jumbo Loans and the 2026 Loan Limits
Here's the part that surprises people: if you have full entitlement, there is no VA loan limit. Since 2020, the VA hasn't capped loan amounts for borrowers with their full entitlement available — your ceiling is whatever a lender will approve based on your income, credit, and the appraisal. You can use this calculator for a $900,000 loan the same way you'd use it for a $300,000 one.
So where do "VA jumbo loans" come in? Two places:
- Lender pricing. Lenders still use the FHFA conforming loan limit as a reference line — $832,750 for a single-family home in most U.S. counties in 2026, up to $1,249,125 in designated high-cost counties (and as high as $1,873,675 in Alaska and Hawaii). Loans above the local limit may be priced as "VA jumbo" with slightly different underwriting — reserves, documentation — even though the VA itself imposes no cap.
- Partial entitlement. If part of your entitlement is tied up in another VA loan, the county loan limit comes back into play. Your remaining guaranty is roughly 25% of the county's one-unit limit minus the entitlement you've already used — and if that guaranty doesn't cover 25% of your new loan, the lender will require a down payment to bridge the gap.
Bottom line for high-cost areas: full entitlement means the higher home prices in places like northern New Jersey or coastal California don't lock you out of $0 down. Partial entitlement means grabbing your Certificate of Eligibility and doing the guaranty math before you shop.
Who Is Eligible for a VA Loan?
- Veterans who served 90+ days of active duty during wartime or 181+ days during peacetime
- Active-duty service members after 90 days of continuous service
- National Guard and Reserve members with 6+ years of service
- Surviving spouses of veterans who died in service or from a service-connected disability
You will need a Certificate of Eligibility (COE) from the VA. Your lender can often obtain this directly or you can apply at va.gov.