How to Use Your VA Home Loan to Buy a House: Complete Guide

Bottom Line Up Front

The VA home loan is one of the best homebuying benefits available, with zero down payment, no PMI, and competitive interest rates. However, most veterans don't fully understand the benefit and overpay or qualify for less than possible. This guide shows you how to leverage your VA home loan to buy a house, navigate the process, and maximize this $235,000+ benefit.

Understanding the VA Home Loan Benefit

What Is the VA Home Loan?

The VA doesn't lend money. Instead, the VA guarantees loans made by private lenders (banks, credit unions, mortgage companies), which allows:

• Zero Down Payment - Buy home with $0 down
• No PMI - No mortgage insurance (saves $200-400/month)
• Competitive Rates - Often lower rates than conventional loans
• Flexible Credit - Loan available with lower credit scores (580+)
• No Prepayment Penalty - Pay off early without penalty

Loan Amount You Can Borrow

2024 VA Loan Limits by Location:

Location Type	Max Loan Guarantee
Tier 1 (most counties)	$766,550
Tier 2 (HCOL areas)	$1,149,825
Tier 3 (California, Hawaii, etc.)	$1,533,100

Key Point: You can borrow more than the limit if you put down additional funds. Example: If limit is $766,550 and house is $900,000, you can borrow $766,550 and put down $133,450.

Step 1: Determine Your VA Loan Eligibility

Who's Eligible for VA Home Loan:

• Active Duty: 181+ days of continuous service
• Reserves/National Guard: 6 years of service
• Honorable Discharge: Required (or general discharge with no dishonorable conduct)
• Surviving Spouses: Can use if service member died in service or from service-connected disability

Check Your Eligibility:

1. Go to VA.gov
2. Log in with eBenefits/VA account
3. View your Certificate of Eligibility (COE)
4. Or request COE if you don't have one

What You Need for COE:

• DD-214 discharge papers
• Social Security number
• Name and date of birth

Step 2: Get Pre-Approved (Week 1-2)

Pre-approval shows sellers you're serious and tells you how much you can borrow.

Pre-Approval Process:

Step 2A: Gather Documents

Standard Documents Needed:

• 2 most recent pay stubs
• 2 most recent tax returns (prior 2 years)
• Bank statements (checking and savings, 2 months)
• Proof of employment (offer letter if new job)
• List of debts/monthly obligations
• Certificate of Eligibility (COE)

If Self-Employed or Changing Jobs:

• 2 years tax returns (showing business income)
• Profit and loss statement
• Employment verification letter
• Documentation of job change (offer letter for new position)

Step 2B: Choose VA Mortgage Lender

Options for VA mortgage lenders:

1. Banks - Chase, Wells Fargo, PNC, etc.
2. Credit Unions - Often better rates for members
3. VA Mortgage Specialists - Specialize in VA loans
4. Online Lenders - Better rates sometimes, less personal service

How to Compare:

Factor	Bank A	Bank B	Bank C
Interest Rate	6.5%	6.25%	6.4%
Origination Fee	1.0%	1.25%	0.75%
Other Fees	$500	$800	$300
Total Cost	High	Medium	Lowest

Shopping Tip: Get quotes from 3-5 lenders. Interest rate difference of 0.5% saves you $100/month on $250K loan.

Step 2C: Submit Pre-Approval Application

Lender will:

1. Verify employment
2. Run credit report (impact: 5-10 points)
3. Review assets and debts
4. Calculate maximum loan amount
5. Issue pre-approval letter

Pre-Approval Letter Shows:

• Maximum loan amount
• Estimated interest rate
• Monthly payment estimate
• Valid for 120 days

Pre-Approval Timeline: 3-5 business days

Step 3: Find and Make Offer on Property (Weeks 2-4)

Pre-approval in hand, you can now shop for homes.

Home Shopping Considerations:

Consider Your Maximum Loan Amount

Example Pre-Approval:

• Pre-approved for: $300,000
• Down payment savings: $40,000
• Maximum purchase price: $340,000

Don't Stretch to Maximum: Just because you can borrow $300K doesn't mean you should. Leave room for:

• Emergency savings (3-6 months expenses)
• Closing costs (even with VA loan, ~$2K-$5K)
• Future maintenance (home repairs)
• Life flexibility (job change, family needs)

Conservative Approach:

• Borrow 75-80% of max approval
• Save down payment for closing costs/reserves
• Leaves financial flexibility

Hire a Real Estate Agent

What to Look For:

• Experience with VA loans (not all agents understand them)
• Local market knowledge
• Positive reviews/referrals
• Responsive communication

What Agent Should Explain:

• Market conditions (buyer vs. seller market)
• Pricing comparable homes
• Negotiation strategy
• Inspection and appraisal process

Make Offer on Property

Once you find property:

1. Make Written Offer

   • Proposed price
   • Contingencies (inspection, appraisal, VA approval)
   • Earnest money deposit ($500-2,000)
   • Closing timeline (typically 30-45 days)

2. Standard Contingencies for VA Loan:

   • VA appraisal approval (property must meet standards)
   • Home inspection (find defects/issues)
   • Financing contingency (loan approval)

3. Negotiate Terms

   • Price
   • Seller paying closing costs (common with VA loans)
   • Repair agreements from inspection
   • Closing date

Step 4: Appraisal and Inspection (Weeks 4-5)

After offer is accepted, two parallel processes begin.

VA Appraisal

What Is VA Appraisal?

• Independent evaluation of property value
• Ensures you're not overpaying
• Confirms property meets VA standards
• Required by VA lender

VA Appraisal Standards: Property must be:

• Safe and sound (no major defects)
• Sanitary (working water, sewer, heating)
• Structurally adequate (roof, foundation, walls solid)
• Livable (not condemned or unsafe)

What Fails VA Appraisal:

• Major roof damage
• Foundation issues
• No working heat source
• Mold or severe water damage
• Lead paint hazards (built pre-1978)
• Unpermitted additions
• Septic systems in poor condition

If Appraisal Comes in Lower Than Offer Price:

• Options: Renegotiate price down, pay difference at closing, or walk away
• VA won't loan more than appraised value

VA Appraisal Timeline: 7-14 days

Home Inspection

What Is Home Inspection?

• Professional inspector evaluates home condition
• Identifies defects, needed repairs, maintenance issues
• Provides written report
• Different from appraisal (appraisal = value, inspection = condition)

Inspector Checks:

• Roof condition
• Foundation/structural integrity
• HVAC (heating/cooling) system
• Plumbing (water damage, leaks)
• Electrical (safe, code-compliant)
• Pest damage (termites, etc.)
• Insulation and ventilation
• Kitchen and bathroom
• Any visible defects

What to Do with Inspection Results:

1. Review report
2. Prioritize repairs (major vs. minor)
3. Negotiate repair responsibility (you or seller)
4. Get repair estimates for major items
5. Decide: accept as-is, request repairs, or renegotiate price

Home Inspection Timeline: 7-14 days (scheduled during inspection period)

Step 5: Finalize Financing (Week 5-6)

Once appraisal and inspection are done, finalize loan.

Clear to Close Checklist

Lender will verify:

• Appraisal meets VA standards and supports loan amount
• Home inspection complete (no unexpected issues)
• Title search completed (no liens or ownership issues)
• Homeowners insurance quotes obtained
• Final walkthrough done (property condition unchanged)
• All documents signed
• Earnest money transferred
• Final funds ready for closing

VA Funding Fee

What Is Funding Fee?

• Fee paid to VA (not VA, but lender collects it)
• Protects VA loan program
• Can be financed into loan amount

2024 Funding Fee Rates:

Situation	Funding Fee
First-time VA loan, no down payment	2.3%
First-time VA loan, 5%+ down payment	1.63%
First-time VA loan, 10%+ down payment	1.23%
Subsequent VA loans, no down payment	3.6%
Disabled veteran (50%+, rated)	No funding fee
Purple Heart recipient	No funding fee

Example:

• Loan amount: $250,000
• Funding fee (2.3%): $5,750
• Total loan including funding fee: $255,750

Important: Some lenders/sellers will cover funding fee. Negotiate!

Step 6: Final Walkthrough and Closing (Week 6-7)

Final Walkthrough

1-2 days before closing:

• Walk through property
• Confirm condition is as expected
• Verify all negotiated repairs were completed
• Check that seller has vacated

Closing Process

At Closing:

1. Sign Documents (lots of them)

   • Mortgage note (promise to repay)
   • Deed of trust (lender's claim on property)
   • Closing disclosure (all terms and costs)
   • Title transfer documents
   • Insurance documents
   • Various lender forms

2. Bring ID and Payment

   • Government-issued ID
   • Cashier's check or bank wire (closing costs/down payment if any)
   • Don't bring personal checks

3. Closing Costs

Typical Closing Costs (VA Loan):

Item	Cost
Appraisal	$400-$600
Title search/insurance	$500-$1,000
Recording fees	$100-$300
Attorney/closing agent	$300-$800
Property taxes (prorated)	$200-$500 (depends on property)
Insurance (first year premium)	$800-$1,500
**Total	$2,300-$4,700

Note: With VA loans, seller often covers closing costs. Negotiate this in purchase agreement.

4. Fund the Loan

   • Lender wires money to title company
   • Earnest money applied to down payment/closing costs
   • You may need to bring cashier's check if costs exceed earnest money

5. Get Keys

   • Once all documents signed and funds transferred
   • You're now the homeowner!

Closing Timeline: 1-2 hours

Step 7: Loan Servicing (After Closing)

After Closing:

1. First Mortgage Payment

   • Due 30 days after closing
   • Lender will provide payment instructions
   • Set up autopay (recommended)

2. Monthly Payment Includes:

   • Principal (paying down loan balance)
   • Interest (cost of borrowing)
   • Property taxes (usually escrowed)
   • Homeowners insurance (usually escrowed)
   • HOA fees (if applicable)

3. Stay Current on Payments

   • Late payments damage credit
   • Missed payments can lead to foreclosure
   • Set up autopay to prevent missing payments

Common VA Home Loan Mistakes

Mistake 1: Not Getting Pre-Approved First

Wrong: Start shopping without pre-approval Right: Get pre-approval before looking at homes

Mistake 2: Ignoring the Appraisal

Wrong: Assuming appraisal will match offer price Right: Property must appraise at or above offer price

Mistake 3: Overextending on Loan Amount

Wrong: Borrow maximum amount available Right: Borrow 75-80% of maximum; leave financial flexibility

Mistake 4: Not Shopping Lenders

Wrong: Accept first lender's offer Right: Get quotes from 3-5 lenders; compare rates and fees

Mistake 5: Not Negotiating Seller to Cover Costs

Wrong: Accept seller's position to cover no closing costs Right: Negotiate seller coverage of appraisal, title, closing costs

Mistake 6: Skipping Home Inspection

Wrong: Skip inspection to save $300 Right: Get inspection; identify issues before purchase

Mistake 7: Not Understanding Funding Fee

Wrong: Surprised by funding fee at closing Right: Understand funding fee is part of loan; can be financed

Mistake 8: Not Maintaining Homeowners Insurance

Wrong: Let insurance lapse Right: Insurance required by lender; maintain throughout loan

Tools and Resources

VA Loan Resources

• VA.gov Home Loan - Official VA home loan information
• VA Loan Limits - Current loan limit information by county
• COE Tool - Get Certificate of Eligibility online
• VA Appraisal Standards - Understand VA property requirements

Mortgage Shopping Tools

• Bankrate.com - Compare VA loan rates
• LendingTree.com - Get quotes from multiple lenders
• Credit Karma - Check credit score
• DepositoUS.org - Find VA-savvy lenders

Homebuying Education

• MyMortgage.com - Homebuying guides and calculators
• HowMuch.net - Affordability calculator
• Zillow.com - Property search and estimates
• Redfin.com - Agent matching and market data

Real Veteran Homebuying Examples

Example 1: First-Time Home Buyer

Marcus's Story:

• Pre-approved: $300,000
• Found home: $280,000
• Down payment: $0 (VA loan benefit)
• Closing costs: $3,500 (seller covered $2,500; Marcus paid $1,000)
• Funding fee: $6,440 (financed into loan)
• Total loan: $286,440
• Monthly payment: $1,950/month (PITI)

Result: Owned home with zero down payment

Example 2: Buying Move-Up Home

Jennifer's Story:

• Sold previous home: $50,000 profit
• Pre-approved: $400,000
• Found home: $420,000
• Down payment: $50,000 (used proceeds from previous sale)
• Loan amount: $370,000
• Closing costs: $4,000 (seller covered all)
• Funding fee: $6,031 (financed)
• Total loan: $376,031
• Monthly payment: $2,400/month (PITI)

Result: Upgraded home using profit + VA benefit

Example 3: Disabled Veteran (No Funding Fee)

David's Story:

• 50% service-connected disability rating
• Funding fee: $0 (waived for disabled veterans)
• Pre-approved: $350,000
• Found home: $340,000
• Down payment: $0
• Loan amount: $340,000 (no funding fee!)
• Monthly payment: $2,100/month (vs. $2,240 if funding fee applied)
• Savings: $140/month by waiving funding fee

Action Items with Deadlines

Task	Deadline	Priority
Get Certificate of Eligibility (COE)	Week 1	High
Gather pre-approval documents	Week 1	High
Get pre-approval from lender	Week 1-2	High
Interview 3-5 real estate agents	Week 2	High
Get pre-approval letter in hand	Week 2	High
Begin home shopping	Week 2-3	Medium
Make offer on property	Week 3-4	Medium
Get home inspection scheduled	Week 4	High
VA appraisal ordered	Week 4	High
Clear inspection issues	Week 5	High
Finalize homeowners insurance	Week 5	High
Get "Clear to Close" from lender	Week 5	High
Final walkthrough	Week 6	High
Closing appointment	Week 6-7	High
Receive keys and move in	Week 7	High

FAQ: VA Home Loans

Q: Can I use VA loan for investment property? A: No, only primary residences. Must intend to live in the property.

Q: What credit score do I need? A: VA doesn't have minimum, but lenders typically want 580+. Lower score = higher rate.

Q: Can I use VA loan if I have debt? A: Yes, but debt impacts how much you can borrow. High debt = lower loan amount.

Q: Do I need to pay PMI? A: No, VA loan doesn't require PMI even with zero down.

Q: Can I refinance my VA loan? A: Yes. VA Streamline Refinance (IRRRL) allows refinancing without new appraisal.

Q: How much house can I afford? A: General rule: housing costs should be 25-28% of gross income. Example: $5,000/month income = $1,250-1,400/month housing payment.

Q: Can my spouse's income be counted? A: Yes, if spouse is on loan. Spouse doesn't need to be veteran.

Q: How long does VA loan process take? A: 30-45 days from offer acceptance to closing.

Q: What if home doesn't appraise at offer price? A: Either renegotiate price down, pay difference at closing, or walk away.

Q: Can I get cash back at closing? A: No, VA doesn't allow cash-out on purchase transaction (only refinances).

Next Steps

1. Week 1: Get COE and pre-approval
2. Week 2: Find real estate agent and get pre-approval letter
3. Week 2-3: Shop for homes
4. Week 3: Make offer on property
5. Week 4-5: Appraisal and inspection process
6. Week 5-6: Finalize financing
7. Week 6-7: Final walkthrough and closing

Key Takeaways

• VA home loan: zero down payment, no PMI, competitive rates
• Get pre-approved before shopping to understand buying power
• Don't borrow maximum—leave financial flexibility
• Shop 3-5 lenders to find best rate and terms
• VA appraisal protects you from overpaying
• Home inspection identifies problems before purchase
• Negotiate seller to cover closing costs
• Understand funding fee (can be waived if disabled veteran rated 50%+)
• Set up autopay for mortgage to stay current on payments
• VA loan is benefit to use—it's valuable (worth $250K+)

---

Ready to use your VA home loan? Use this guide to understand the process, shop lenders effectively, and buy your home with confidence. Your VA home loan benefit is valuable—use it wisely.