Homebuyers

The VA Loan Advantage: 100% Financing for Veterans Buying Homes

Those who served their country through military service often have a big advantage when they’re purchasing homes: VA loans.

These mortgages, backed by the U.S. Department of Veteran Affairs, offer 100% financing and lower mortgage rates than other types of loans. That means veterans, active-duty service members, and eligible surviving spouses don’t have to worry about coming up with a down payment.

More than 416,000 VA loans were made in fiscal year 2024, according to the VA. The average borrower received a $373,290 mortgage.

“The greatest advantage for veterans is the zero-down-payment option,” said Anthony Ramirez, a New American Funding loan officer based out of San Diego, Calif. “I would [also] say the lower than average interest rate since it's a government loan.”

What are VA loans and how do they work?

VA loans were created in 1944 through the Servicemen's Readjustment Act, better known as the GI Bill. They were designed to help eligible veterans and members of the military achieve homeownership.

In addition to no down payments and lower mortgage rates, there are no limits on the size of the loan. However, borrowers must still qualify for the mortgage and can’t already have another VA loan on a separate property

Borrowers also don’t need to pay private mortgage insurance (PMI) if they don’t put down 20% of the sale price of the home. This can help to lower monthly payments.

Veterans can reuse their benefits multiple times throughout their lives, provided they meet eligibility requirements.

The loans may also be easier for homebuyers to qualify for than other types of mortgages. The VA doesn’t set a minimum credit score to be approved for the loan. Many lenders require a score of at least 620, but some will issue the loans for those with lower scores.

Debunking misconceptions about VA Loans

One of the big misconceptions about VA loans is that sellers in competitive housing markets won’t accept them. That’s typically not true—unless a higher or better offer comes in.

Some listing agents mistakenly believe VA appraisals come in low or that the property condition requirements to get the loan are overly strict. These conditions include things like it being safe to access the property, the home not being prone to flooding, and the property having safe drinking water, and working electricity and sewer systems. 

Another myth is that VA loans can only be used once. In reality, as long as you have your full VA entitlement, you can reuse your VA benefits.

However, if you already have a VA loan or have defaulted on a previous VA loan, you will need to follow the standard VA loan limit of $806,500 in 2025. (The loan limits are higher in certain, pricey counties.)

This means your lender will look at the amount of your remaining entitlement and the loan limits in the county you hope to buy a home in. That will be used to figure out if you owe a down payment and if so, how much.

VA Loan costs to keep in mind

Although VA loans require no down payment, that doesn't mean you won't need to bring any money at closing. Buyers should budget for lender fees, an appraisal, third-party fees for title insurance, and taxes. Your lender is likely to also request additional funds for an escrow account to cover several months of loan, tax, and insurance payments.

"The biggest mistake [VA buyers make] is thinking they won't have to bring any money to close," said Dusty Lloyd, a New American loan officer based in Dana Point, Calif. "Fees can vary significantly between a $200,000 home in Indiana and a $2 million home in Malibu."

To prepare, ask your lender for an estimate of closing costs.

In some cases, it may make sense to negotiate for seller contributions. But in the most competitive markets, sellers are less likely to cover fees.

That’s why not having to also pay a down payment is so advantageous to VA buyers.

“My father used to tell me that you can't save as fast as property appreciates,” said Ramirez. “Using the VA loan eliminates that long delay of trying to save and budget.”

Dusty Lloyd NMLS # 247106

Anthony Ramirez NMLS# 249819