What is a VA loan?
A VA loan is a home loan option backed by the U.S. Department of Veterans Affairs (VA) and offered through private lenders. Designed for eligible veterans, active-duty service members and qualifying military spouses, VA loans provide standout benefits such as no down payment, no private mortgage insurance (PMI) and more flexible credit guidelines than many other loan types. These loans also often feature a lower VA loan interest rate, making them an attractive choice compared to other home loan types.
Who qualifies for a VA loan?
VA home loan rates are available to eligible veterans, active-duty service members, National Guard and Reserve members and some surviving spouses. To qualify, you’ll need a Certificate of Eligibility (COE) and must meet VA loan requirements related to credit, income and debt-to-income ratio (DTI). The home must be your primary residence and you’ll need to move in within 60 days of closing the deal. Other eligibility factors may include your monthly payment capacity and estimated closing costs.
PRO TIP
While you'll need a Certificate of Eligibility (COE) to confirm your qualification for a VA home loan, you can get mortgage pre-approval and begin comparing rates without it.
VA loan requirements
Your eligibility for a VA loan will depend on certain factors.
| Qualification Requirements | ||
|---|---|---|
| Service | 90 consecutive days of active duty during wartime or 181 days during peacetime or 6+ years in the National Guard or Reserves or surviving spouse of a qualifying service member | |
| Credit score | Typically, 620 or higher (varies by lender) | |
| Debt-to-Income Ratio (DTI) | Preferred DTI of 41% or lower (a higher percentage may be allowed depending on factors such as residual income) | |
| Residual income | Must meet VA’s regional guidelines for monthly leftover income after expenses | |
| Occupancy | Must be used as your primary residence | |
| Documents | Certificate of Eligibility (COE) DD-214 or statement of service (if applicable, can be requested through milConnect) and proof of income and assets |
VA loan benefits
VA loans come with unique perks that make homeownership more accessible to those who have served. From no down payment to competitive rates, here’s what sets them apart:
- No loan limits (with full entitlement)
With full VA entitlement, there’s no cap on how much you can borrow as long as you meet the lender’s requirements.
- Competitive interest rates
VA loans often come with lower interest rates than current mortgage rates. That can translate to lower monthly payments and significant savings over the life of your loan.
- No down payment
This is one of the biggest advantages: you can buy a home with no money down. That’s a game changer for many first-time home buyers who might otherwise struggle to save for a traditional down payment.
- No Private Mortgage insurance
VA loans do not require PMI, unlike conventional mortgages which require it if you put less than 20% down.
- Designed for easier approval
VA loans offer more flexible credit and income requirements. Lenders may approve borrowers with limited credit history or a higher debt-to-income (DTI) ratio, especially ones with strong compensating factors like good credit, steady income or high residual income.
VA loan limits and funding fees
Understanding VA loan rates, loan limits and funding fees can help you make the most of a VA loan. Here's a quick rundown on how they work—and why knowing the current mortgage rates for VA loans matters when planning your budget.
If you’re not sure how much you qualify for, a VA home loan calculator can estimate your maximum loan amount based on entitlement and other factors. This can help you compare VA loan rates to conventional options and better understand your buying power.
VA loan limits
Loan limits depend on your level of VA entitlement:
Full entitlement
• No official loan limits.
• Borrow as much as you qualify for with lender approval.
Partial entitlement
• Governed by county-specific loan limits.
• The VA typically guarantees up to 25% of the loan within these limits.
• Limits are determined by the Federal Housing Finance Agency (FHFA) and updated annually.
VA funding fee
The VA funding fee is a one-time payment that helps reduce the cost of the VA loan program for taxpayers. The exact amount depends on:
- Your down payment amount (if any)
- Whether it’s your first or subsequent VA loan
- Your military service history
You can pay the fee upfront at closing or roll it into your loan. Veterans receiving compensation for service-connected disabilities are often exempt, making the loan even more affordable.
| Down payment | First use | After first use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
How to apply for a VA loan
Here’s a step-by-step guide:
- Confirm your eligibility: Make sure you meet the eligibility requirements for a VA loan. You can learn more or check your status at va.gov.
- Get your certificate of eligibility (COE): You'll need a COE to move forward. You can request it through the VA’s eBenefits portal or by mail, or your lender may be able to request it on your behalf.
- Choose a VA-approved lender: Not all lenders offer VA loans, so pick one that has experience with the process. Citi, for example, is a VA-approved lender with tools and support designed for veterans and service members.
- Get pre-approved: Pre-approval helps you understand how much home you can afford and shows sellers you’re a serious buyer. Programs like Citi SureStart® Pre-Approval can simplify this step and help you move forward faster.
- Find a home and sign a purchase agreement: Work with a real estate agent to find a home that meets your needs and budget. Once you've found the right place, you’ll sign a purchase agreement (usually with a financing contingency).
- Complete the loan application: Submit your loan application with your lender and provide the required documentation, such as income, assets and credit history.
- VA appraisal and underwriting: The VA will order an appraisal of the property to ensure it meets their guidelines. At the same time, your lender will underwrite the loan and review all your documentation to verify your financials and eligibility.
- Close on your loan: If everything checks out, you’ll close on the loan. You’ll review and sign your final loan documents, pay any closing costs and officially become a homeowner.
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