Guide to Buying a Home With a VA Loan

Written by Samantha SheltonNMLS 1647301Updated October 2026

Eligible veterans, service members and surviving spouses can buy a home with a VA loan at 0% down and pay no monthly mortgage insurance at any loan-to-value, and the VA reports that nearly 90% of VA-backed loans are made with no down payment at all. With full entitlement, the VA sets no maximum loan amount – your lender’s approval and the appraised value set the ceiling, not a government cap.

The path runs in five moves: pull your Certificate of Eligibility (COE), run your funding fee math, pick a lender and agent who close VA files often, find a home that clears the VA’s minimum property requirements, then clear the appraisal and close. The VA doesn’t lend the money; private lenders do, and they price the same veteran differently.

Learn how the process works step by step, what the funding fee costs, what the appraisal checks, and how to make a VA offer win. Still choosing a program? Start with our Loan Types & Programs guide.

Key takeaways:

• Zero down is the default, not the exception: Nearly 90% of VA-backed loans close with no down payment, and there is no monthly mortgage insurance premium at any loan-to-value.
• The funding fee runs 1.25% to 3.3% of the loan amount: First use with less than 5% down is 2.15%, a subsequent use with less than 5% down is 3.3%, and veterans receiving VA compensation for a service-connected disability are exempt entirely.
• Full entitlement removes the loan limit: A COE showing $36,000 of basic entitlement means no VA-set ceiling on loan size, so the number to chase is a lender approval, not a county limit.

What is a VA loan?

A VA loan is a mortgage made by a private lender and partially guaranteed by the U.S. Department of Veterans Affairs, which is what lets lenders offer terms no conventional program matches.¹ The VA writes the rules; a bank, credit union or broker’s wholesale lender funds it. Four benefits do most of the work:

• No down payment: Required only when the sales price exceeds the appraised value. At or below it, a qualified borrower with sufficient entitlement puts down $0.
• No mortgage insurance: No PMI, no monthly MIP, at any loan-to-value. On a conventional loan at 5% down, mortgage insurance is a monthly line item until you hit the cancellation threshold. On a VA loan it never exists.
• No loan limit with full entitlement: The VA sets no maximum loan amount for a veteran with full entitlement. Your credit, income, debts and assets set the size.
• Limited closing costs, no prepayment penalty: The VA caps lender origination charges at a 1% flat fee and allows no penalty for paying off early.

Each is unpacked in VA loan benefits for veterans; the hub is our VA loans section, and the VA’s own overview sits on the VA’s official home loan programs page.

Step 1: Get your Certificate of Eligibility

The COE shows a lender that you are eligible for the benefit, and there are three ways to get one. Your lender can usually pull it electronically through the VA’s Web LGY system in minutes. You can also apply online or mail VA Form 26-1880 to a regional loan center; the VA’s goal for contacting COE applicants averages 5 business days.

Veterans supply a DD-214; active-duty, Guard and Reserve members supply a commander-signed statement of service. Surviving spouses receiving Dependency and Indemnity Compensation file VA Form 26-1817, and those not receiving DIC file VA Form 21P-534EZ.

Full entitlement vs. remaining entitlement

Basic entitlement is $36,000, and a COE showing the full $36,000 means no VA loan limit as long as you can afford the payment and the appraisal supports the price. If you’ve used the benefit and haven’t restored it, your county’s one-unit conforming loan limit returns to the math: multiply that limit by 0.25, then subtract entitlement already charged. On the 2026 baseline conforming limit of $832,750, that’s $208,187 of capacity minus whatever a prior loan still holds.

One precision point that costs veterans real money: a VA loan is generally assumable with servicer approval, but when a non-veteran assumes it, your entitlement stays tied to that loan. It is restored only when a qualified veteran substitutes their own entitlement or the loan is paid in full. Service minimums, credit and DTI are covered in how to qualify for a VA loan.

Step 2: Run your funding fee and cash-to-close math

The VA funding fee is a one-time charge, calculated as a percentage of the loan amount, that funds the program in place of monthly mortgage insurance. It is not flat – it moves with your down payment and prior use.

Those rates apply to loans closed on or after April 7, 2023. On a $300,000 zero-down first-use purchase, 2.15% is $6,450.² Note the second-use jump: 3.3% versus 2.15% is roughly $3,450 more on that loan, which is why a repeat user should price a 5% down payment even when zero down is available.

You are exempt entirely if you receive VA compensation for a service-connected disability, are eligible for it but take retirement or active-duty pay instead, receive DIC as a surviving spouse, hold a proposed or memorandum rating before closing, or are an active-duty Purple Heart recipient. Exempt borrowers pay none of it.

• Origination is capped at a 1% flat fee: Under 38 C.F.R. 36.4313 the lender’s origination charges can’t exceed 1% of the loan amount, and certain fees can’t be charged to the veteran at all.
• Seller concessions are capped at 4%: The VA limits concessions to 4% of the property’s established reasonable value, covering the funding fee, prepaid taxes and insurance, and temporary buydowns. Ordinary costs a seller pays – title work, appraisal, origination fee, normal points – generally don’t count against it.
• Anyone can pay the funding fee: The seller, the lender or a family member using gift funds can cover it, and it can be financed.

All of it lands on your Loan Estimate, the only apples-to-apples way to compare two VA lenders. The CFPB explains how to read your Loan Estimate; more moves live in our VA loan tips.

Step 3: Choose a VA-savvy lender and agent

Who prices your file is the highest-leverage decision here, because the VA guarantees the loan but does not set your rate. The VA says it plainly: lenders offer different rates and fees, so shop around. Ask two questions. First, ask about credit overlays rather than “the VA minimum” – the VA sets no minimum credit score, so every floor you’ll hear quoted (580, 620, 640) is a lender overlay that varies lender to lender. Second, ask how many VA files they closed last quarter; a lender who touches VA loans twice a year learns on your closing date.

Get a real preapproval before you tour anything; why mortgage preapproval matters covers what a lender verifies. On the agent side, VA Circular 26-24-14 lets veterans pay reasonable and customary buyer-broker fees on purchase contracts executed on or after August 10, 2024, a temporary local variance valid until rescinded. Those fees can’t be financed into the loan, though the seller may still cover them.

Step 4: Find a home that meets VA minimum property requirements

A VA loan buys a home you will live in. You certify you’ll occupy it within a reasonable time, generally 60 days of closing, so investment properties and second homes are out.

The property also has to clear the VA’s minimum property requirements (MPRs), the standards in Chapter 12 of the VA Lender’s Handbook for housing that is safe, structurally sound and sanitary. MPRs are a floor, not a repair wish list. Eligible property types are broad: single-family homes, VA-approved condominiums, up to four units where you occupy one, manufactured homes on a permanent foundation, and new construction.

Two habits keep MPR problems from becoming delays. Hire a private inspector even though the VA only recommends one, and if a home shows an obvious issue such as a failed roof or exposed wiring, negotiate the repair before the appraisal rather than after.

Step 5: Appraisal, Notice of Value, and closing

Once the purchase agreement is signed, your lender – not you – orders the appraisal, and every VA purchase loan requires one. You then receive a Notice of Value (NOV) documenting the estimated value, comparable sales, photographs, and any items needing repair to meet MPRs.

Your contract must also contain the VA escape clause – mandatory on every VA-guaranteed loan, and without it the VA may decline to guarantee the loan. It means you don’t forfeit earnest money or have to complete the purchase if the contract price exceeds the reasonable value the VA established. If the NOV lands under your contract price, you have four moves:

• Request a Reconsideration of Value: Supply valid comparable sales data through your lender or agent, and VA staff will review the report against that data and its own market data.
• Renegotiate the price: The seller may drop to the appraised value or offer other concessions, within the 4% cap.
• Bring cash to closing: Cover the gap out of pocket. After a failed ROV and renegotiation, it’s the only way to keep the contract alive.
• Use the escape clause: Walk, with your earnest money back. You won’t recover inspection or appraisal costs, and prepaid new-construction upgrades are often not refundable.

From there it’s underwriting, your Closing Disclosure at least 3 business days before closing, then signing. Once rates move, the same benefit gives you a low-friction exit – see the benefits of refinancing a VA loan, including the IRRRL at 0.5%.

How to make a VA offer competitive

The obstacle usually isn’t underwriting. It’s a listing agent who believes VA loans close slowly or that the appraisal will torpedo the deal. Both beliefs are outdated, and both are beatable with preparation.

• Lead with a verified preapproval: A letter backed by pulled credit, verified income and a reviewed COE reads stronger than a bigger number from a lender who verified nothing.
• Have your agent brief the listing side in writing: Name the lender, state the target close date, and note that the escape clause is standard on every VA contract, not a demand unique to this buyer.
• Use the 4% concession allowance as a tool, not a discount request: On a $250,000 purchase, that’s up to $10,000 the seller can direct at your funding fee, prepaids and buydown – often worth more to you than the same money off the price, at identical cost to them.

Rules do shift, and proposals in circulation would change funding fee structure and refinance mechanics; we track them in proposed changes to VA loan programs. Military.com’s VA home loan guide covers it from the service member’s side.

What Michigan veterans should know

Two Michigan items move real dollars here, and one assumption about down payment assistance runs backwards on a zero-down loan.

• The disabled veterans property tax exemption is 100%, not partial: Michigan exempts a qualifying disabled veteran’s principal residence from property taxes entirely under MCL 211.7b, claimed on Treasury Form 5107 filed with the local assessing officer after January 1 and before December 31 of the calendar year for which the exemption is claimed.³ An exemption granted as to taxes levied on or after January 1, 2025 stays in effect without reapplying until it is rescinded or denied. You qualify if the VA rated you permanently and totally disabled from service at the 100% rate, certified you for specially adapted housing assistance, or rated you individually unemployable. Once the exemption is granted, it removes the property tax from your escrow payment, and those veterans are typically funding-fee exempt too. Ask your lender how it treats the exemption when it estimates your payment before closing.
• MSHDA assistance rides on a MSHDA first mortgage: The MI 10K DPA Loan provides up to $10,000 as an interest-free second with no monthly payment, deferred until you pay off the first mortgage, sell or refinance the home, or stop occupying it, and it must pair with a MSHDA MI Home Loan first mortgage – that pairing rule, not the VA guaranty, decides whether it stacks on your file. MSHDA sets a 640 minimum credit score, homebuyer education, and a statewide sales price limit of $566,355 effective June 1, 2026.
• On a zero-down VA loan, the seller concession usually beats the assistance: Assistance mostly targets closing costs, and the VA’s 4% allowance covers the same costs with no second lien, no 640 score floor and no asset cap – up to $12,000 on a $300,000 Michigan purchase. Michigan also sits in the VA’s Midwest residual income region, so your qualifying target is $1,003 for a family of four on a loan of $80,000 or more, per 38 C.F.R. 36.4340.

How do you compare VA lenders?

Every VA lender follows the same VA rules, then sets its own price and its own extra requirements. The fair test is two or more VA Loan Estimates, requested on the same day, for the same home, loan amount and lock period.

Lines to compare on each VA Loan Estimate

Questions that show real VA experience

• What do you do when the Notice of Value comes in low? Listen for the Reconsideration of Value steps, with dates.
• How do you handle repairs the appraiser calls for? A lender who knows the minimum property requirements will tell you who fixes what, and when.
• Which credit and debt limits do you add to VA’s? VA sets no minimum score, so any floor you hear is the lender’s own.

In Michigan, the Disabled Veterans Exemption is claimed after you own the home, on Form 5107 with your local assessor. Until it is granted, ask each lender how it estimates your taxes, and make sure every estimate uses the same figure.

Align is a broker, so this comparison is one Samantha runs for you: one VA application, priced at multiple wholesale lenders, laid out line by line. Already holding a VA Loan Estimate from a big national lender you have seen advertised? Bring it in, and she will add it to the same table.

FAQ: Buying a home with a VA loan

Here are answers to common questions about buying a home with a VA loan.

How do I get a Certificate of Eligibility for a VA loan?

Three ways: online through the VA, by mail with VA Form 26-1880, or – fastest for most people – through your lender, who can usually pull it electronically in minutes. You’ll need a DD-214 or a commander-signed statement of service, and the VA’s goal for contacting applicants averages 5 business days. Our guide to qualifying for a VA loan lists the documents by service category.

Does a VA loan really require no down payment?

Yes. As long as the sales price does not exceed the appraised value and you have sufficient entitlement, the VA requires no down payment, and nearly 90% of VA-backed loans are made with none. You’ll still owe closing costs and, unless exempt, the funding fee – which can be financed or seller-paid. What the benefit is worth overall is in VA loan benefits for veterans.

What is the VA funding fee and who is exempt?

The funding fee is a one-time charge of 1.25% to 3.3% of the loan amount that replaces monthly mortgage insurance, and the rate depends on your down payment and prior use – 2.15% at first use with less than 5% down, 3.3% on a subsequent use. Veterans receiving VA compensation for a service-connected disability, certain surviving spouses receiving DIC, and active-duty Purple Heart recipients are exempt. More ways to cut cash to close: our VA loan tips.

Can sellers refuse VA loan offers?

Sellers can accept whichever offer they choose, and some still believe VA loans close slowly or that the appraisal will kill the deal. In practice VA loans close on timelines comparable to conventional loans, and the escape clause is standard contract language, not a red flag. A verified preapproval and a lender who closes VA files weekly make the difference – see our VA loans hub.

The bottom line on buying a home with a VA loan

Buying a home with a VA loan means 0% down when the price is at or below appraised value, no monthly mortgage insurance at any loan-to-value, and no VA-set loan limit once your COE shows full entitlement of $36,000. What remains is the funding fee – 1.25% to 3.3% of the loan amount, waived for veterans receiving service-connected disability compensation – plus closing costs, with origination capped at 1% and seller concessions allowed up to 4% of reasonable value.

If you’re ready to use the benefit you earned, talk to Align Lending – we’ll shop your VA scenario across our lender network and put competing quotes in front of you side by side. Call 248-506-5727 or start online today.

Footnotes:

1. Align Lending is not affiliated with, endorsed by, or acting on behalf of the U.S. Department of Veterans Affairs or any government agency. VA loan programs are offered through participating VA-approved lenders, and not all applicants will qualify. Return to text.

2. Example figures in this article are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Your loan amount, funding fee, closing costs and approval depend on your application, your entitlement, the property, and the lender’s guidelines, and will be itemized on your Loan Estimate and Closing Disclosure. Return to text.

3. This is general information, not tax advice. Eligibility for the Michigan disabled veterans property tax exemption depends on your individual circumstances and is determined by your local assessing officer and the State Tax Commission. Consult a qualified tax professional and your local assessor about your situation. Return to text.

Figures current as of August 2026; verify with the linked source before relying on them. Sources: no down payment when the sales price is at or below appraised value, no need for private mortgage insurance or MIP, fewer closing costs which may be paid by the seller, no prepayment penalty, and the occupancy condition, U.S. Department of Veterans Affairs (va.gov, “VA-backed purchase loan”). Nearly 90% of VA-backed loans made with no down payment, va.gov (VA home loans). VA funding fee rates of 1.25%, 1.5%, 2.15% and 3.3% on purchase loans, 2.15% and 3.3% on cash-out refinances and 0.5% on an IRRRL, effective April 7, 2023, and the full list of funding fee exemptions, va.gov (VA funding fee and loan closing costs). Basic entitlement of $36,000, no VA-set loan limit with full entitlement, and the remaining-entitlement calculation using the FHFA one-unit conforming loan limit multiplied by 0.25 less entitlement already charged, va.gov (VA home loan entitlement and limits). 2026 baseline conforming loan limit of $832,750 for one-unit properties, Federal Housing Finance Agency. Certificate of Eligibility application methods including Web LGY and VA Form 26-1880, required documentation by service category, and VA Forms 26-1817 and 21P-534EZ for surviving spouses, va.gov (How to request a COE). Average of 5 business days as VA’s goal for contacting COE applicants, va.gov (Check your COE status). Loan assumption requiring servicer approval, entitlement remaining with the loan on a non-veteran assumption, and restoration by substitution of another eligible veteran’s entitlement, VA Home Loan Guaranty Buyer’s Guide. The steps for beginning the VA home loan process, the escape clause requirement and its contract language, Notice of Value contents, Reconsideration of Value, and the options when the NOV is below the contract price, VA Home Loan Guaranty Buyer’s Guide and 38 C.F.R. 36.4303(k)(4). One percent flat origination fee limit, 38 C.F.R. 36.4313. Seller concessions limited to 4% of the established reasonable value and the items that do and do not count toward it, VA Lender’s Handbook (VA Pamphlet 26-7), Chapter 8. Minimum Property Requirements of safe, structurally sound and sanitary housing, VA Pamphlet 26-7, Chapter 12. Occupancy certification and the 60-day reasonable-time standard, VA Pamphlet 26-7, Chapter 3. Veterans may pay reasonable and customary buyer-broker fees for purchase contracts executed on or after August 10, 2024, as a temporary local variance valid until rescinded, and such fees may not be financed into the loan, VA Circular 26-24-14. Loan Estimate comparison guidance and Closing Disclosure delivery at least three business days before closing, Consumer Financial Protection Bureau. Table of Residual Incomes by Region including the Midwest figure of $1,003 for a family of four on loans of $80,000 and above, 38 C.F.R. 36.4340. Michigan disabled veterans property tax exemption criteria, full exemption of the principal residence, the Form 5107 affidavit filed with the local assessing officer after January 1 and before December 31 of the year claimed, and continuation without reapplication for exemptions granted as to taxes levied on or after January 1, 2025, MCL 211.7b(2) and (4) and Michigan Department of Treasury. MI 10K DPA Loan maximum of $10,000, interest-free terms with no monthly payment and repayment deferred until payoff of the first mortgage, sale or refinance, or the home ceasing to be owner-occupied, the requirement that it pair with an MI Home Loan first mortgage, the 640 minimum credit score and homebuyer education requirements, and the statewide sales price limit of $566,355 effective June 1, 2026, Michigan State Housing Development Authority.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. VA program rules, funding fee tiers, entitlement amounts, loan limits, concession caps and state and local tax exemptions change and vary by borrower, property and county; confirm your figures with the VA, MSHDA and your Loan Estimate, and consult a qualified professional about your situation. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154, and is not affiliated with or endorsed by the U.S. Department of Veterans Affairs or any government agency.

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