VA Home Loan Starter: Your Benefit in Plain English

What the VA benefit gives you

• No down payment with full entitlement, as long as the appraisal supports the price.
• No monthly mortgage insurance.
• Limits on the closing costs you can be charged. The seller can pay some of them.
• A benefit you can reuse. It is a lifetime benefit, not a one-time deal.
• An assumable loan. A buyer who meets the loan servicer’s requirements may be able to take over your loan later.

Who can use it

• Veterans who meet the service requirements
• Active-duty service members
• National Guard and Reserve members
• Some surviving spouses

The VA decides who has the benefit. Your Certificate of Eligibility, or COE, is the proof. A VA loan is for a home you will live in.

What to gather

• Your DD-214, or a statement of service if you are still serving
• Your COE, if you already have it
• Pay stubs, or award letters for disability or retirement income
• Two months of bank statements, every page
• A photo ID

There are three ways to get a COE: through your lender, which is often the fastest, online at VA.gov, or by mail with VA Form 26-1880.

Entitlement and the funding fee

Entitlement is the part of the loan the VA guarantees to the lender. It is why a VA loan can work with no down payment. With full entitlement there is no VA loan limit, though the payment still has to fit your income. If you have used the benefit before, entitlement can often be restored after that loan is paid off.

The funding fee is a one-time fee paid to the VA. It can usually be added to the loan. The amount depends on your down payment and whether this is your first VA loan. Some veterans do not pay it at all, including those who receive VA disability compensation.

Common snags

• A slow COE. Missing service records can delay it. Start early.
• Property condition. The VA appraisal also checks that the home meets basic safety and livability standards.
• Entitlement tied up in a prior loan. A VA loan you still have, or one that was not paid in full, changes the math.
• Assuming the VA sets the credit rules. The VA does not publish a minimum score. Lenders set their own standards. The VA credit and readiness plan covers how to prepare.

Your next step

Find your DD-214 and decide roughly where and when you want to buy. With those two things, a first call can cover your entitlement, the funding fee and a realistic payment range.

When you want to talk it through, book a short phone call with Zak on Chris Lamm’s team at MortgageOne. No credit check is needed for a first call, and you can bring as many questions as you like.