Question 1

What is a VA loan and who is eligible?

Accepted Answer

VA loans are mortgages guaranteed by the Department of Veterans Affairs. Eligible: active duty service members, veterans with 90+ days service, National Guard/Reserves with 6 years service, surviving spouses. Must have certificate of eligibility (COE) from VA.

Question 2

What are the main benefits of VA loans?

Accepted Answer

Key benefits: 0% down payment (no PMI), lower interest rates (typically 0.25-0.5% below conventional), no loan limit with full entitlement, funding fee exempt for disabled veterans (10%+ rating), assumable loans, no prepayment penalty.

Question 3

What is the VA funding fee?

Accepted Answer

VA funding fee: 2.25% (first use, 0% down), 1.5-1.75% (with 5-10% down), 3.75% (subsequent use, 0% down). Disabled veterans (10%+ VA disability rating) are exempt. Fee can be financed into the loan. Much lower total cost than PMI.

Question 4

Can I get a VA loan with bad credit?

Accepted Answer

VA loans have no official minimum credit score, but lenders typically require 620+. VA loans are more forgiving: consider overall financial picture, not just credit score. Residual income requirement (must have money left after debts). Many lenders accept lower scores for VA than conventional.

Question 5

Is a VA loan always better than conventional?

Accepted Answer

VA loans are usually best for eligible borrowers: 0% down, no PMI, lower rates. Conventional may be better if: excellent credit + 20% down (no PMI anyway), or if VA funding fee makes loan too expensive and you have large down payment. Always compare total costs.

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VA Loan Key Benefits