VA Home Loan Guide

The steps in this guide are in the order you'll actually do them. To buy a home you'll use a VA purchase loan — usually with no down payment, no private mortgage insurance, and competitive rates. Start with your Certificate of Eligibility, then move to the loan. (Deeper details on how VA loans work are in “More about VA loans” near the end.)

Step 1 — Get your Certificate of Eligibility (COE)

Your COE is the document that proves to a lender you qualify for the VA benefit. Get this first — everything else follows from it.

How do I prepare before I request a COE?

Gather your service records before you start. What you need depends on your status:

Veteran — a copy of your discharge or separation papers (DD-214).
Active-duty service member — a statement of service signed by your commander (or personnel office) showing your name, Social Security number, date of birth, date you entered duty, any lost time, and your command.
National Guard or Reserve — your DD-214 if you were activated; if never activated, NGB Form 22 and NGB Form 23.
Surviving spouse — the veteran's DD-214 if you have it, plus VA Form 26-1817 (if you receive Dependency and Indemnity Compensation) or VA Form 21P-534EZ with a marriage license and death certificate.

How do I request my COE?

Three ways, fastest first:

Through your lender — most VA-approved lenders can pull your COE instantly through the VA's system. This is usually the easiest route.
Online — apply yourself at va.gov.
By mail — send VA Form 26-1880 to your regional loan center. This is the slowest option.

What happens after I request my COE?

The VA reviews your request and notifies you of the decision, and you can track the status online. Once your COE is approved, your lender moves forward — ordering the home appraisal and reviewing your credit and income.

Step 2 — Apply and get pre-approved

Before you apply: credit and budget

Two things to do before you talk to a lender:

Check your credit. Your credit history helps set your interest rate and terms. Review your reports early so you can fix any errors first — checking your own credit doesn't lower your score. You can get your reports free at annualcreditreport.com.
Set a budget. Look at three numbers: your down payment (often $0 with a VA loan), your closing costs, and the monthly payment — principal, interest, taxes, and insurance (PITI). Knowing these tells you what price range is realistic before you shop.

How do I apply for a VA-guaranteed loan?

Choose a VA-approved lender, give them your COE (or let them pull it), and apply for pre-approval. The lender reviews your income, credit, and debt-to-income ratio to tell you how much you can borrow. Pre-approval is what makes your offer credible when you find a home.

What are the next steps for a VA-backed home loan?

Here's the path from pre-approval to keys:

Get pre-approved. A pre-approval letter shows sellers you're serious and tells you your price range.
Find a home you intend to live in (a VA loan can cover a 1–4 unit property as long as you occupy one unit), and make an offer. A real estate agent can help you make a strong offer and navigate the process.
Application and Loan Estimate. Once you have a property address, your file becomes a full application and the lender sends a Loan Estimate within 3 business days showing your rate, payment, and costs. To move forward, you give your lender your “Intent to Proceed.”
Processing and appraisal. The lender verifies your documents and orders the VA appraisal. Respond quickly to any requests to keep things on track.
Underwriting. An underwriter reviews everything; if it's in order you'll get an initial approval, then final approval once any remaining conditions are cleared.
Closing Disclosure. You'll receive a Closing Disclosure at least 3 business days before closing. Read it carefully against your Loan Estimate — it lists your final rate, loan terms, monthly payment, and closing costs.
Final walk-through and closing. Do a final walk-through of the home, then sign at closing — in person, or a hybrid e-closing where you sign most documents electronically ahead of time. Bring your funds by wire transfer or cashier's check, sign, and get your keys.

What you'll need to apply

Start gathering these early so they're ready when the lender asks:

Date of birth and Social Security number
A 2-year address history and 2-year work history
Gross monthly income, plus any other income you want counted (VA disability compensation, retirement, etc.)
W-2s and tax returns for the last 2 years
Pay stubs from the last 2 months (or a Statement of Service / LES if you're still serving)
2 months of statements for bank, retirement, and investment accounts
A list of your monthly debts and expenses
Your COE, and — if you're exempt from the funding fee — your disability award letter

What if I have questions about the loan process?

For questions about your specific loan, ask your lender first. For VA-side questions, call the VA home loan help line at 877-827-3702 (TTY: 711) or contact a VA regional loan center.

Step 3 — The funding fee and loan limits

What is the VA funding fee?

It's a one-time fee paid to the VA that helps keep the loan program running. It's a percentage of the loan amount, and you can pay it at closing or roll it into the loan. Current purchase-loan rates (effective April 7, 2023):

Down payment	First use	Subsequent use
Less than 5%	2.15%	3.3%
5% or more	1.5%	1.5%
10% or more	1.25%	1.25%

Will I have to pay the funding fee?

Not if you qualify for an exemption. You're exempt if you:

Receive VA compensation for a service-connected disability;
Are eligible for that compensation but receive retirement or active-duty pay instead;
Receive Dependency and Indemnity Compensation (DIC) as a surviving spouse;
Are active duty with a pre-discharge claim rating showing you're eligible for compensation; or
Are active duty and show evidence of a Purple Heart on or before your loan closes.

Your COE will state your funding-fee status, so check it there.

What are the current VA home loan limits?

If you have full entitlement, there is no loan limit — you can borrow as much as a lender will approve and the appraisal supports, typically with no down payment. Limits only come into play if you have reduced or no remaining entitlement (for example, you already have an active VA loan, or a past VA loan ended in a default that wasn't repaid). In those cases the limit matches the FHFA conforming loan limit for your county, which you can look up on the FHFA website.

Step 4 — If you run into trouble

What should I do if I'm having trouble paying my mortgage?

Act early — it gives you the most options. Contact your loan servicer right away; they may offer a repayment plan, a special forbearance, or a loan modification. The VA also has loan technicians who can step in on your behalf and help you work with the servicer — call 877-827-3702.

How does foreclosure affect my future home benefit?

A foreclosure or short sale can reduce the entitlement you have left. The portion of entitlement tied to that loan isn't restored until any loss the government covered is repaid. You may still qualify for another VA loan later using your remaining entitlement, but the amount available to you may be lower.

More about VA loans

Background on how the benefit works — useful once you understand the basic steps above.

What kind of VA loan do you need?

To buy a home, you'll use a VA purchase loan. The VA also backs other loan types you may use later: an Interest Rate Reduction Refinance Loan (IRRRL) to lower your rate, a cash-out refinance, and the Native American Direct Loan (NADL) for eligible buyers on federal trust land.

The occupancy rule

A VA loan is for a home you'll live in as your primary residence — not a pure rental or investment property. You're expected to move in within a reasonable time after closing (commonly about 60 days). If you're active duty and can't move in yourself, your spouse can usually satisfy the occupancy requirement.

Buying a 2–4 unit property (and using rent to qualify)

A VA loan can buy a property with up to four units, as long as you live in one of them. Rent from the other unit(s) may be counted toward qualifying — but lenders apply conditions (documented market rent from the appraisal, cash reserves, and sometimes prior landlord experience). Ask your lender up front how they'll treat rental income, because it varies.

Buying with another veteran: two veterans can combine their entitlement on one loan, which can support a larger multi-unit purchase. A joint VA loan with anyone other than your spouse needs VA prior approval, so raise it with your lender early.

Your entitlement — and using the benefit more than once

Entitlement is the amount the VA guarantees to your lender. There's a basic entitlement of $36,000, plus additional (“bonus”) entitlement on larger loans, and the VA generally guarantees 25% of the loan. You can use the benefit more than once. You can also restore entitlement you used before — for example, after you sell the home and pay off the loan, or a qualified veteran assumes it — and with enough remaining entitlement you can even hold two VA loans at the same time.

The VA appraisal and minimum property requirements

Your lender orders a VA appraisal, which sets the home's value (the Notice of Value) and checks that it meets VA minimum property requirements for safety and soundness. Important: an appraisal is not a home inspection — pay for your own inspection too, so you know the true condition of the home.

How lenders decide you can afford it

Lenders look at two things. Debt-to-income (DTI) compares your monthly debts to your gross income; 41% is used as a benchmark, not a hard cap. The VA also uses a residual income test — the money left over after your major monthly expenses — with minimums that vary by region and household size (VA Lender's Handbook, Pamphlet 26-7, ch. 4). Strong residual income can offset a higher DTI, so ask your lender for the figure that applies to your region and family size.

One more rule to know: your income has to be stable and likely to continue. A lender needs to see that the money you're qualifying on will keep coming — which matters most if you're changing jobs, separating from the military, or counting income that has an end date. Steady, documented income is what carries the loan.

Seller concessions — up to 4%

The VA lets the seller pay your closing costs, discount points, and other concessions — up to 4%. That can cover items like your funding fee or prepaid taxes and insurance, and it can even be used to buy down your interest rate. This is separate from a seller simply paying ordinary, customary closing costs. It's worth asking for in your offer.

Energy-efficient improvements (the VA EEM)

You can roll the cost of approved energy-saving upgrades into your VA loan with an Energy Efficient Mortgage: up to $3,000 based on documented cost, or $3,001–$6,000 if the lender certifies the energy savings outweigh the higher payment. Above $6,000 isn't allowed. Qualifying items include insulation, storm windows and doors, weather-stripping and caulking, solar heating and cooling, and vapor barriers — not appliances or luxury items like hot tubs. The work is usually done within six months of closing, with the money held in escrow.

VA loans are assumable

A VA loan can be assumed — taken over — by another buyer who qualifies, veteran or not, often at your original interest rate. That's valuable when rates have risen since you bought. One caution: if the person who assumes your loan defaults, it can count against your entitlement, so make sure your entitlement is released or substituted at the time of assumption.

A few more advantages

With full entitlement, a VA purchase loan usually means no down payment and no private mortgage insurance. There's no prepayment penalty, and the VA limits the fees a lender can charge you — the lender's flat charge is capped at 1% of the loan amount, and certain fees are “non-allowable” and can't be passed to you at all.

Terms worth knowing

Interest rate vs. APR — the interest rate is the cost of borrowing; the APR folds in certain fees, so it's usually a bit higher and is one way to compare loans. Lenders can calculate APR differently, so compare Loan Estimates side by side.
Discount points — an optional fee paid at closing to lower your rate; one point = 1% of the loan amount.
Rate lock — locks your interest rate for a set period so it can't rise before closing.
PITI — the four parts of your monthly payment: principal, interest, taxes, and insurance.
Escrow — an account your lender uses to collect and pay your property taxes and insurance.
PMI (private mortgage insurance) — normally required on low-down-payment loans, but VA loans don't require it.
DTI (debt-to-income) — your monthly debts divided by your gross income.

Does a less-than-honorable discharge disqualify you?

Not automatically. An other than honorable (OTH) discharge — and even a bad conduct or dishonorable discharge — does not produce an automatic “no.” You can apply, and the VA will review your service records (a “character of discharge” determination) to decide whether you qualify for a COE. If needed, you can also request a Character of Discharge review or pursue a discharge upgrade through your branch of service. The point: don't rule yourself out — let the VA make the call.

Extra advantages if you have a service-connected disability

A service-connected disability rating opens up several benefits that stack with the VA loan:

No funding fee. If you receive (or are eligible for) VA disability compensation, you're exempt from the funding fee — a savings of thousands. And if you already paid the fee and are later granted compensation effective from a date before your loan closed, you may be able to get it refunded — ask your lender or the VA to check.
More buying power. VA disability compensation counts as qualifying income, and because it's tax-free, many lenders will “gross it up” (a common convention is about 25% higher) when calculating what you can afford. Ask how your lender treats it.
State property tax breaks. Many states offer a property tax exemption or reduction for disabled veterans — often a full exemption at a 100% permanent and total rating, with partial relief at lower ratings in some states. Rules vary by state and county, so check yours; it can save thousands a year.
Adapted housing grants. For certain severe service-connected disabilities, VA grants can help you buy or modify an accessible home — SAH up to $126,526 and SHA up to $25,350 (FY 2026) — and can be used alongside a VA loan.