This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Consult a qualified professional about your situation.

A VA loan is a mortgage made by a private lender and partially guaranteed by the U.S. Department of Veterans Affairs, and for eligible service members, veterans and surviving spouses it allows 0% down with no monthly mortgage insurance. The VA sets no minimum credit score and no maximum loan amount for borrowers with full entitlement. Lenders set those limits, which is why the same file can be declined in one place and approved in another. Most borrowers pay a one-time funding fee of 1.25% – 3.3% of the loan amount, waived for veterans receiving compensation for a service-connected disability.

Learn more about VA loans, including eligibility rules, funding fee costs and the step-by-step buying process.

Key takeaways:

• Zero down, no monthly mortgage insurance: Eligible borrowers can finance 100% of the purchase price with no PMI and no annual mortgage insurance premium, the biggest recurring cost gap among low-down-payment options.
• Funding fee: Most borrowers pay a one-time VA funding fee of 1.25% – 3.3% of the loan amount, which can be rolled into the loan and is waived for veterans receiving compensation for a service-connected disability.
• Where the variation lives: Across Align’s wholesale lender network, VA credit-score overlays run from roughly 580 to 660. The same veteran can be declined at one lender and approved at another on an identical file.

What is a VA loan, and who is eligible?

A VA loan is a mortgage made by a private lender and partially guaranteed by the U.S. Department of Veterans Affairs, which lets eligible service members, veterans and surviving spouses buy a home with no down payment and no monthly mortgage insurance.² The VA doesn’t lend money. It stands behind part of the loan, and that guaranty is what lets a lender approve a zero-down file it would otherwise decline.

Eligibility comes from service, not income or assets, and thresholds depend on when and how you served. The VA publishes the full era-by-era table.

• Service since August 2, 1990: Generally 24 continuous months of active duty, or the full period called with a 90-day minimum.
• Service from September 8, 1980 to August 1, 1990: Generally 24 continuous months, or the full period called with a 181-day minimum. Earlier eras carry their own, often shorter, thresholds.
• National Guard and Reserve: 90 days of non-training active-duty service under Title 10, or six creditable years with continued service or a qualifying discharge.
• Surviving spouses: Unremarried spouses receiving certain VA Dependency and Indemnity Compensation, and spouses of members listed as missing in action or prisoners of war.

A discharge for a service-connected disability can qualify you with less time served, so if your record sits near one of these lines, start with how to qualify for a VA loan. Qualify, and the program carries benefits no other loan program matches.

How to get your Certificate of Eligibility

A Certificate of Eligibility (COE) confirms you qualify and how much entitlement you have left. It doesn’t approve a loan; it proves the benefit is yours. Three ways to get one: through your lender, who can pull it electronically; online at VA.gov; or by mail on VA Form 26-1880. VA says mail takes longer, so have your lender do it.

VA loan requirements: Credit, income, property and occupancy

The VA prescribes no minimum credit score, federal VA underwriting rules set no numeric threshold at all, while lenders in Align’s network generally want 580 – 660, with pricing improving above 680. That gap decides most VA approvals.

• Credit score: The floor is a lender overlay, not a VA rule. Two lenders looking at the same 590-score file will give you two different answers.
• Debt-to-income ratio: VA’s standard is 41% or less. Above that, the lender must document specific compensating factors in a written justification that “must not be perfunctory,” or send the file to VA for prior approval. Plenty of VA loans still close above 41%.
• Residual income: The requirement most buyers have never heard of, and the one that decides close calls. VA sets a minimum you must have left monthly after mortgage, debts and upkeep, by region and household size for Midwest borrowers on loans of $80,000 or more, $441 for a household of one to $1,003 for a household of four.
• Occupancy: You certify you’ll occupy the home as your primary residence within a reasonable time after closing, which VA generally treats as 60 days. Investment and vacation properties are out.
• Property condition: The appraiser checks minimum property requirements confirming the home is safe, structurally sound and sanitary, working heat, safe water, a sound roof, no exposed wiring.

Here’s how VA compares to the two programs eligible buyers get steered toward.

Feature	VA	FHA	3%-down conventional
Minimum down payment	0%	3.5%	3%
Monthly mortgage insurance	None	Annual MIP, usually for the loan’s life	PMI until 80% – 78% loan-to-value
Typical minimum credit score	Lender-set, commonly 580 – 660	580 with 3.5% down	620
One-time upfront fee	Funding fee, 1.25% – 3.3%, waivable	Upfront MIP, financed	None

Our walkthrough of VA loan qualification requirements covers documents and entitlement math. Already under contract? Our VA loan tips that keep a file on schedule are the faster read.

What does a VA loan cost? Funding fee, no PMI and closing costs

The VA funding fee runs 1.25% – 3.3% of the loan amount depending on your down payment and whether this is your first use. It replaces mortgage insurance, it can be financed into the loan, and many borrowers never pay it at all.

Down payment	First use	Subsequent use
Less than 5%	2.15%	3.3%
5% – 9.99%	1.5%	1.5%
10% or more	1.25%	1.25%
Interest Rate Reduction Refinance Loan (IRRRL)	0.5%	0.5%

On a $280,000 home in Waterford with 0% down on a first use, the fee is 2.15%, or $6,020, financed, it brings the loan to $286,020 rather than cash at closing.¹ Put 5% down and it drops to 1.5%.

You’re exempt entirely if you receive VA compensation for a service-connected disability, are eligible for it but take retirement or active-duty pay instead, hold a proposed or memorandum rating from a pre-discharge claim, receive Dependency and Indemnity Compensation as a surviving spouse, or hold a Purple Heart while on active duty.

What a VA borrower can’t be charged

VA regulations bar brokerage and service charges against the veteran, and cap a lender’s origination compensation at a flat charge of no more than 1% of the loan amount in place of origination costs not otherwise itemized and allowed. Fees a conventional borrower would simply pay get shifted onto the seller, a lender credit or the originator, one of the VA loan benefits for veterans buyers rarely hear about.

A conventional loan under 20% down requires private mortgage insurance, and most FHA loans carry an annual premium that never falls off. VA borrowers skip that line entirely.

How to buy a home with a VA loan, step by step

Buying a home with a VA loan follows the same arc as any purchase, with two extra checkpoints: the COE at the front and the VA appraisal in the middle. Both are where files stall.

1. Request your COE

Do this before you shop, because it also tells you how much entitlement you have left. A lender can usually pull it in the same conversation; a mailed VA Form 26-1880 takes longer.

2. Get preapproved with a lender that actually closes VA loans

Volume matters more here than anywhere. A lender that closes a handful of VA files a year treats the appraisal and the funding fee exemption as novelties, and novelties cost days.

3. Write an offer that reassures the seller

Some listing agents still flinch at VA offers. A preapproval the agent recognizes, a realistic closing date and a willingness to address minor repair callouts settle it faster than a concession.

4. Clear the VA appraisal and Notice of Value

The VA assigns the appraiser rather than letting the lender pick one, and it publishes a timeliness requirement, a maximum number of business days from assignment to delivery, county by county. Michigan’s windows run about a week to a week and a half depending on the county, and rural northern counties sit at the long end. Ask your loan officer for the current requirement on your county before you set a closing date. The result is a Notice of Value, which may list required repairs.

5. Close and move in

You sign, the loan funds and you certify you’ll occupy the home. Budget for the prepaid taxes, insurance and escrow any buyer pays, zero down covers the down payment, not the whole closing table.

Beyond a standard purchase: VA construction loans and reusing entitlement

Yes, the VA guaranty can cover new construction, the benefit can be used to buy or build, but far fewer lenders offer it, which is exactly where a broker matters. A VA construction-to-permanent loan funds the build and converts to a standard VA mortgage at completion, with one closing and one set of costs. Lenders in our network that offer it require a VA-registered builder, and most ask for no payments during the build. Our guide to VA construction loan benefits covers the tradeoffs.

Because Align is a broker, we can place VA construction financing through partner lenders even though most retail banks won’t touch it. Where no partner can serve a scenario, we’ll say so.

Entitlement is also reusable. Sell the home and pay off the loan, and it’s restored in full. Pay it off but keep the property, and you can apply for a one-time restoration to buy another primary residence. Same VA Form 26-1880, with proof the prior loan is paid off.

Where VA files slow down (and how to prevent it)

• Appraisal repair callouts: Peeling paint, a failing roof or a dead furnace triggers a repair requirement before closing. Walk the property with the safe, sound and sanitary standard in mind, and negotiate repairs into the contract early.
• Seller hesitation: Almost always outdated belief rather than anything in your offer. Our VA loan tips include the offer language that defuses it.
• Missing DD-214 or COE delays: Guard and Reserve records are the usual culprit, since service points statements often have to be assembled from several units. Start here.
• Lender overlays you never see: A decline that reads like a VA rule is frequently one lender’s internal policy. Ask which guideline killed the file. If it’s a score floor or a manual-underwrite restriction, another lender may not have it. The sequence is mapped in our guide to buying a home with a VA loan.

What Michigan veterans should know

• Disabled veteran property tax exemption: Michigan law exempts from property taxes real property owned and occupied as a principal residence by a qualifying disabled veteran or the unremarried surviving spouse of one, a full exemption on the homestead, not a credit, claimed by affidavit filed with your local assessor and acted on by the board of review. Filing procedures were revised recently, so confirm the current form and deadline.
• MSHDA assistance pairs well with VA: Because a VA loan needs no down payment, Michigan State Housing Development Authority assistance, a deferred second mortgage with no monthly payment, can go toward closing costs instead. County income and price limits apply. See state-specific mortgage assistance programs, or our USDA and assistance programs hub if VA isn’t your path.
• Winter appraisals: Michigan VA appraisals scheduled between December and March routinely draw roof, gutter and exterior-paint callouts that can’t be cured until spring. Plan an escrow holdback.

FAQ: VA loans

Here are answers to common questions about VA loans.

Can I use a VA loan more than once?

Yes. VA entitlement is reusable. Once you sell the home and the VA loan is paid off, you can apply to have your full entitlement restored and use the benefit again, and many veterans buy several homes this way over a career. You can also hold two VA loans at the same time using remaining entitlement, though that second loan usually requires a down payment. Ask a lender to pull your Certificate of Eligibility to see exactly how much entitlement you have left.

Do sellers turn down VA offers?

Sometimes, yes, almost always because of outdated beliefs about VA appraisals and repair requirements rather than anything in the offer itself. VA appraisals do include minimum property requirements, but they run on a timeline comparable to FHA and conventional appraisals, and most callouts are minor. A strong preapproval letter and a listing agent who has closed VA files before usually settles the concern. See our guide to buying a home with a VA loan for offer language that helps.

Is there a maximum VA loan amount?

No, not for borrowers with full entitlement. The VA stopped applying county loan limits to full-entitlement borrowers in 2020, so your ceiling is whatever a lender will approve based on your income, credit, and the appraised value. Borrowers with reduced entitlement, because they have another active VA loan or a prior VA foreclosure, are still tied to their county’s conforming loan limit for the zero-down calculation.

Can I buy a duplex or a four-unit property with a VA loan?

Yes, up to four units, as long as you occupy one of them as your primary residence, generally within 60 days of closing. Some lenders will count projected rent from the other units toward your qualifying income, though many require documented landlord experience or reserves before they will. Rules vary a lot by lender here, which is one of the clearest cases for shopping the scenario across several of them.

The bottom line on VA loans

A VA loan lets eligible service members, veterans and surviving spouses buy with 0% down and no monthly mortgage insurance. Most borrowers pay a one-time funding fee of 1.25% – 3.3% of the loan amount, waived for veterans receiving compensation for a service-connected disability. VA sets no minimum credit score and no loan limit for full-entitlement borrowers. Lenders set both, and their overlays are where identical files get different answers. Compare it against the full menu in our types of mortgage loans hub.

If you’re ready to use your VA benefit, talk to Align Lending, we’ll shop your scenario across our lender network and show you the numbers side by side. Call 248-506-5727 or start online today.

Footnotes:

1. Example figures 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 rate and terms will depend on your application and market conditions. Back to text
2. Align Lending works with VA-approved lenders and is not endorsed or sponsored by the Department of Veterans Affairs or any government agency. Back to text

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Consult a qualified professional about your situation. Program terms, credit score minimums, and fee figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to lender overlays and change.