Iowa VA Loans

What is an Iowa VA loan?

(Content originally published in 2023, updated for 2025)

If you are a veteran living in Iowa and you dream of owning your own home, a VA loan may be able to help you successfully achieve that dream.

VA loans were created in 1944 by the United States Department of Veterans Affairs (VA) to empower military servicemembers, veterans, and certain eligible spouses on their journey to become homeowners.

These loans offer many benefits for homebuyers. If you’re using a VA loan in Iowa, you may be able to get a mortgage with no down payment, secure lower interest rates than Conventional loans, and not have to pay private mortgage insurance (PMI) if you put down less than 20%.

How do VA loans work in Iowa?

The VA guarantees the loans but doesn’t issue them. This means lenders make the loans to qualified borrowers in Iowa and then the VA backs them. If the borrower is unable to make their mortgage payments, the government will help to cover the lender’s losses.

Since VA loans are insured, lenders can offer better terms and conditions for homebuyers and provide more flexible requirements than other kinds of mortgages.

For instance, borrowers who use a VA loan don’t have a minimum credit score requirement or need to earn a set salary to qualify.

These loans are similar to government-backed Federal Housing Administration (FHA) loans, which offer down payments as low as 3.5%. These loans also make it easier for first-time buyers, as well as those who may not have as much saved up for a down payment, to become homeowners.

VA loan benefits in Iowa

Since VA loans are guaranteed by the government, they have specific benefits. These benefits include:

• No down payment: For many servicemembers, this is the most attractive feature of a VA loan. Down payments typically range from 3% to 20% of the purchase price of the home and are usually required. Saving for a down payment is one of the most significant concerns for many homebuyers since it is often a large lump sum that must be paid upfront when buying a home.

VA loans are one of the only home loans that do not require a down payment. Homebuyers in Iowa may also be eligible for a 0% down U.S. Department of Agriculture (USDA) loan, depending on where they are purchasing a home.

• Lower interest rates: VA loans typically offer lower mortgage interest rates that are well below those of Conventional loans. Mortgage rates change daily and are influenced by a number of factors, including the economy and financial markets as well as how much debt you have and your credit score.

• No monthly mortgage insurance payments: Since VA loans are guaranteed by the government, they do not require mortgage insurance (MI). This is an added charge that borrowers with other types of loans pay every month if they put down less than 20% of the purchase price of their homes.

Mortgage insurance is designed to protect lenders in case the borrower defaults on their loan. How much a borrower pays in MI depends on several factors, including the down payment amount and the borrower’s credit score.

If a borrower stops making their mortgage payments on a VA loan, then VA will pay the lender.

• No prepayment penalty: Paying off your mortgage early or refinancing your loan can have certain benefits, but it may also cost you money if the loan has a prepayment penalty.

With a VA loan, you can pay off your loan or refinance at any time without having to pay a penalty.

The only exception is a VA Cash-Out Refinance, which has its own requirements. Borrowers must have made at least six months of payments on their existing mortgage prior to refinancing.

• Reduced funding fees: VA loans have funding fees that are due at closing. These fees, which range from 0.5% to 3.3% of the loan amount, help to offset the cost of the loan.

Borrowers may qualify for a reduced VA funding fee on a purchase mortgage or be exempt from VA funding fees if they receive service-connected disability compensation.

• Ability to finance the VA funding fee: You may also be able to roll the fee into your mortgage, so you don’t have to come up with the cash at closing. This allows you to pay it off over time.

• Less-than-perfect credit usually accepted: Various VA loan types have different credit score requirements. You don't need to have perfect credit to qualify for a VA loan.

• VA assistance to borrowers experiencing certain financial difficulties: Borrowers may be eligible for assistance depending on their circumstances.

• Benefits are life-long: The VA entitlement is a life-long benefit that can be used multiple times with a few caveats. That means you can typically use it to buy a home in Iowa, sell the property, and buy another home using the benefit.

Iowa VA loan requirements

VA loan requirements in Iowa are the same as other states.

There are eligibility requirements that are related to the time you’ve served. There are also certain fees associated with the loans.

In addition, the property must be residential and in reasonable shape, determined by the VA’s criteria. This includes having enough space for everyone who will be living in the home, having safe access to the property, a stable roof, working mechanical systems, and clean water and sanitation. There must also not be any lead-based paint.

According to the VA, loan eligibility typically requires one of the following:

• 90 days of service during wartime.

• 181 continuous days of active service during peacetime.

• 6 or more years of service in the National Guard or National Reserves.

• Being the surviving spouse of a service-member who died in the line of duty, or as a result of a service-related disability. You cannot have remarried if you want to use a VA loan.

In addition to eligibility requirements, VA loans also require:

• Payment of a funding fee. The funding fee is a one-time payment that helps cover the cost of the loan. This fee can vary depending on the amount of the down payment and military category.

How much you will pay depends on the loan type and amount. There are certain circumstances where you may be exempt, so make sure to check with your loan officer.

• Borrowers are usually required to move into their new home no more than 60 days after it is purchased. Some exceptions can be made in certain circumstances.

• VA loans must be used for a primary residence. They cannot be used for investment homes or second homes.

Each lender has their own set of requirements for loan qualification. A loan officer can help answer your questions.

Iowa VA loan limits

VA loans have their own set of loan limits. These limits vary from county to county and change every year based on fluctuations in the housing market. How much you are eligible to borrow also depends on the local housing market. Typically, you can borrow more in higher-cost counties than in counties where home prices are lower.

If you have your full VA entitlement (more on that below), there are no loan limits. This means you can borrow as much as you are approved for by your lender—and you don’t have to make a down payment.

However, if you have a reduced entitlement, you will need to stick to VA loan limits. This is for homebuyers who already have an existing VA loan or have defaulted on a previous VA loan they had taken out.

All counties in Iowa adhere to the standard VA loan limit of $806,500 for a single-family home.

Once you use some of their entitlement, the lender will factor in your remaining entitlement and the county’s loan limit. These are used to decide how much of a down payment you will need to make, as well as how much of their loan the VA will guarantee.

For example, say you wanted to purchase a home in a standard county, but you were already using $100,000 of your entitlement. The VA would guarantee a quarter of the $806,500 loan limit, which is $201,625.

You would then need to subtract $100,000 from that amount, leaving you with $101,625 left of your entitlement. You could be eligible to borrow up to four times that amount, or $406,500.

For a home priced over that amount, you would need to kick in a down payment of 25% of the difference between the price of the home you want to purchase and your remaining entitlement.

If you wanted to buy a $450,000 home, you would need to make a $10,875 down payment.

VA loan entitlement in Iowa

VA loans have something called entitlement. Entitlement is the amount of money that the VA will guarantee to the lender if the borrower defaults on their loan. This is what we are referring to when we say that the loan is backed by the government. If the borrower defaults, the government will pay back the lender.

VA loan entitlement has two basic forms: full entitlement and remaining entitlement. The amount of your entitlement affects the size of your down payment and how much the VA will guarantee on your loan.

Full entitlement: When you have full entitlement, you do not have to make a down payment, and the VA will guarantee up to 25% of the loan amount.

This guarantee is one of the main things that makes VA loans so beneficial to borrowers. They make the loans less risky for lenders. This enables the lenders to be more flexible with the terms and conditions of the loan agreement.

According to the VA, you have full entitlement if you:

• Have never used your VA home loan benefit to purchase a home.
• Have used your VA home loan benefit before, but you have paid off the loan and sold the property.
• Have used your benefit, but the property has been foreclosed on, or you’ve had a short sale (meaning you sold the home for less than you currently owed on the mortgage) and repaid the loan in full.

Remaining entitlement: When you have remaining entitlement, it means that you’ve already used a portion of your entitlement on a loan. That means you may have to make a down payment when purchasing a home.

While the VA guarantees 25% of the total loan amount with a full entitlement, it’s different with a remaining entitlement. If you are using remaining entitlement, the VA will guarantee 25% of the county loan limit minus whatever amount of your entitlement has already been used. You may have to kick in the difference through a down payment.

According to the VA, you have remaining entitlement if:  

• Your VA loan is currently active, and you are still in the process of repaying it.
• You’ve repaid your VA loan entirely, but you still own the home.
• You still own the home and have refinanced your VA loan into a non-VA loan.
• You sold your home for less than you currently owed on the mortgage, and you have not repaid your VA loan in full.
• The home that was purchased with a VA loan was foreclosed on and you have not repaid the loan in full.

The amount of entitlement that you have left does not determine how much you will be able to borrow for a loan. That is up to your lender. How much you can borrow will depend on factors like your credit score, how much you earn, and where you are trying to buy.   

Your entitlement is a lifelong benefit from the VA and can be reused multiple times if certain conditions are met. It is also a spousal benefit that may be available to eligible spouses of veterans or servicemembers. 

However, having a VA entitlement does not guarantee that a borrower will be approved for a mortgage. Ask your loan officer about lender-specific qualifications.   

Mortgage rates for VA loans in Iowa

Mortgage rates fluctuate daily. They change based on the economy, market conditions as well as your own financial profile and the length of the loan you plan to use.

VA loans do tend to offer lower mortgage interest rates than many other loan types since they are backed by the government. Those lower rates may result in substantial savings over the life of your loan.

Types of VA mortgage programs in Iowa

VA purchase loan:

Fixed-rate VA loans used to purchase a home in Iowa may be a good choice for homebuyers seeking a set housing payment for the duration of their loan.

The majority of the payment, the principal and interest won’t change with these loans. However, home insurance costs, property taxes, and homeowner association fees may fluctuate over time, leading to a change in your monthly mortgage payment.

VA loans are also available as adjustable-rate mortgages (ARMs). This may be ideal for active military borrowers who may not plan to be in the same home long-term.

The mortgage rate on an ARM is fixed for the first five, seven, or 10 years, depending on the loan, and then adjusts based on current rates up to a certain cap. This might appeal to borrowers who expect to sell their home before the introductory period ends.

For example, borrowers who expect to receive PCS orders within five years may consider a 5/1 VA ARM. These loans can be used to:

• Buy or build a home.
• Make your home more energy-efficient.

VA cash-out refinance loan:

The VA Cash-Out Refinance allows borrowers to pull cash out of their home's equity, even if they are currently in another type of mortgage, like FHA or USDA loan. With these loans you can:

• Refinance up to 100% of the value of your home for loans that meet the Conforming loan limit.
• Refinance a non-VA loan.
• Use the cash for many things, including paying off debt, paying for college tuition, or buying an investment property.
• Access the equity that is tied up in your home as cash.

VA streamline refinance loan:

VA mortgage holders may refinance with the VA Interest Rate Reduction Refinance Loan (IRRRL), also known as the VA Streamline Refinance. These loans may offer:

• Cash benefits for a borrower who already holds a VA loan.
• A more simplified refinance process.
• Access to a lower interest rate and monthly mortgage payment.
• Borrowers don’t need to submit bank statements, W2s, paychecks, or other documents.
• A more stable monthly mortgage payment.

Refinancing your loan can offer you many benefits. You can use our refinance calculator to check and see what refinancing might be able to do for you.

How can you get a VA loan in Iowa?

To apply for a VA loan in Iowa, contact your lender. Your loan officer will answer your questions and guide you through the process.

There are several common steps required for getting a VA loan. They include:

1. Apply for a Certificate of Eligibility (COE). You can request a COE from the VA. This certificate is the document that verifies your eligibility status for a VA loan. Your loan officer can help you gather the necessary forms. The information you will need will include information about your identity as well as details of your military service.
2. Work with your loan officer to ensure you find the right home loan for your needs. There are several different types of VA loans. Your loan officer will help you choose which one is right for you.
3. Your lender may be able to refer you to a real estate agent to help you find a home.
4. Your loan officer will coordinate the home appraisal process for you, ordering a property appraisal from a VA-assigned appraiser.
5. If your lender is authorized by the VA to approve and close your loan, you won't have to wait for a separate VA approval of your credit application.
6. Loan closing. Congratulations, you are now an Iowa-state homeowner.

Iowa VA loan FAQs

What is the VA loan limit in Iowa?

All counties in Iowa adhere to the standard VA loan limit of $806,500 for a single-family home.

How are Iowa VA loan payments determined?

Your loan payments are determined by a number of factors. These include things like how much you need to borrow, which type of loan you qualify for, and extra costs like property taxes and homeowners insurance.

Your loan payment will also be determined by your mortgage interest rate and the length of the loan.

For instance, if you have a 30-year loan, your monthly payments will be lower than if you have a 15-year loan. That’s because you’re spreading out your payments over a longer period of time.

Similarly, if your interest rate is higher, your payments will be larger as you will be paying more interest.

Do I need private mortgage insurance (PMI) with an Iowa VA loan?

PMI is not required on VA loans. These loans are guaranteed by the U.S. government, which insures lenders against borrowers defaulting on their mortgages if they stop making their monthly payments.

Is Iowa a veteran-friendly state?

Iowa has many benefits specifically for veterans. The state offers housing benefits, financial assistance programs, employment assistance, hiring preferences, and educational benefits for those who have served their country.

Each program has its own qualifications for eligibility. You can contact the Iowa Department of Veterans Affairs for guidance on what benefits might be available to you.

What should I know about property taxes for VA home loans in Iowa?

In Iowa, veterans can apply for a property tax exemption, which reduces the assessed value of their home by $4,000 when calculating property taxes.

Applicants must be honorably discharged, have served a minimum of 18 months, or at least one day during a specific war or conflict. Applicants may also be eligible if they served less than 18 months but were honorably discharged due to a service-related injury. The unremarried spouse of a qualified veteran may also be eligible for this exemption. The deadline to sign up is July 1.

Additionally, veterans who are disabled can apply for the homestead property tax credit, which provides a 100% property tax credit for eligible veterans and surviving spouses of an eligible veteran.

Applicants must have a 100% service-related disability rating from the VA, or a total and permanent disability rating based on unemployability.

Applicants for either program must contact their local county assessor’s office for more information.

Does Iowa offer VA loans to surviving spouses?

Yes, VA loans are available for surviving spouses who meet certain qualifications.

Is it hard to get approved for a VA loan in Iowa?

VA loans may be one of the easiest loans to qualify for if you are an eligible veteran or spouse. That’s because they accept lower credit scores and don’t require a down payment.

However, since these loans were designed specifically for servicemembers, you must be able to prove your service in the U.S. military or certain related organizations.