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A VA home loan is a mortgage backed by the U.S. Department of Veterans Affairs and made by a private bank or lender. You don't put any money down, you skip private mortgage insurance, and the rate typically runs below what a conventional loan costs for the same borrower. That combination exists because the VA guarantees a portion of every loan, which reduces the lender's risk and passes part of that saving to you.
Here's how the mechanics actually play out, from requesting your Certificate of Eligibility to the day you get the keys.
The VA doesn't lend you money directly. What it does is promise to reimburse your lender up to 25% of the conforming loan limit if you default. That backstop is why lenders waive the down payment requirement and skip the PMI charge. They're covered on the tail risk.
This means you shop lenders, not the VA. Every bank, credit union, and mortgage company that participates in the program sets its own interest rate, its own origination fees, and its own credit score overlay. Two lenders can look at the same COE and quote rates that differ by half a percentage point. Getting at least three quotes is worth the extra hour. A half-point difference on a $350,000 loan is roughly $100 a month for 30 years.
If you're in Texas and want to layer a state benefit on top, the Texas Veterans Land Board runs a separate program with its own weekly rate that has historically undercut open-market VA pricing on certain loan amounts. See how the two programs compare in our Texas Vet Loan vs VA loan guide.
Eligibility is about your service record, not your income or credit score. The main categories:
Your proof of eligibility is a Certificate of Eligibility. You can pull it yourself at VA.gov in about five minutes, or your lender can request it through the Automated COE system, which usually takes just a few minutes. Most lenders do this as a routine step in preapproval. The full eligibility breakdown, including which discharge codes qualify and which don't, is in our VA eligibility requirements guide.
The VA itself sets no minimum credit score. Lenders add their own requirements on top. Most Texas VA lenders draw the line at 620, though some will go to 580 with strong compensating factors like substantial cash reserves or a very low debt-to-income ratio. Our VA loan credit score guide covers what different lenders actually require.
Income qualification uses the VA's residual income standard, not just a debt-to-income cap. After calculating your monthly obligations, the VA wants to confirm you'll have a set dollar amount left over each month. For a family of four in the South region (where Texas falls), the threshold is $1,003 per month in residual income. Most applicants with steady employment pass it without issue. Your lender runs this calculation automatically and tells you where you land.
There's no private mortgage insurance on a VA loan. That's real savings every month. PMI on a conventional loan with less than 20% down typically runs 0.5% to 1.5% of the loan per year until you hit 20% equity.
The VA replaces PMI with a one-time funding fee. For first-time users buying with no down payment, the fee is 2.15% of the loan amount. Put 5% or more down and it drops to 1.50%. Put 10% or more down and it drops to 1.25%.
The funding fee rolls into the loan balance, so you don't need cash at closing to cover it. On a $400,000 purchase with no down payment, 2.15% adds $8,600 to the balance. Compare that to conventional PMI on the same loan, which could run $150 to $250 a month for several years before you build enough equity to cancel it. The funding fee is usually the better deal for long-term buyers.
Veterans who receive VA disability compensation at any rating are exempt from the funding fee entirely. Surviving spouses receiving Dependency and Indemnity Compensation are also exempt. If you have a pending disability claim at the time of closing, flag it with your lender. You may be eligible for a refund once the VA rates your claim. Missing this exemption is money left on the table.
Subsequent uses of the VA benefit bump the no-down-payment fee to 3.30%. The down-payment tiers stay the same: 1.50% at 5%, 1.25% at 10%. If you're reusing the benefit and you're certain you'll stay long enough to benefit, even a modest down payment to drop to the 1.50% tier saves a meaningful amount on a large loan.
Entitlement is the dollar amount the VA guarantees to your lender. You have a basic entitlement of $36,000 (a legacy number from the program's early years) plus a bonus entitlement that covers 25% of the current conforming loan limit. In most Texas counties for 2024, that limit is $766,550, so the VA backs up to roughly $191,637 on any single loan. That's why lenders approve VA loans up to the conforming limit with no down payment required.
Go above the conforming limit and you're in VA jumbo territory. You can still use the benefit, but you'll need to bring in 25% of the amount above the limit as a down payment. On a $900,000 purchase in a standard-limit county, the excess is $133,450. Twenty-five percent of that is about $33,362. Texas loan limits by county are in our Texas Vet loan limits guide.
You can carry two VA loans at once if you have enough remaining entitlement. A veteran who wants to keep a first home as a rental and buy a new primary residence does this routinely. Your lender pulls the entitlement details from your COE and works through the math. If a previous VA loan is paid off, full entitlement restores and you can reuse the benefit on the next purchase.
Every VA purchase requires a VA appraisal, done by a VA-certified appraiser from a rotating panel. The appraisal does two things: it establishes fair market value and checks that the home meets Minimum Property Requirements.
MPRs are the VA's basic standards for safety, soundness, and sanitation. Common issues in Texas: roofs with fewer than two to three years of remaining life, HVAC systems that won't function during Texas summers, standing water under a slab foundation, exposed electrical wiring, and no permanent heat source. None of these are automatic deal-breakers. If the seller agrees to fix them or credits you at closing, the appraisal can still clear.
The VA appraisal is not a home inspection. It won't catch a leaky water heater, aging components, or code violations that don't rise to MPR level. Always hire your own inspector. A thorough one runs $300 to $600 and is worth every dollar.
The appraisal itself typically costs $500 to $800 in Texas and is ordered after you go under contract. Turnaround from assignment to report usually runs 7 to 14 days, though it varies by area and appraiser workload. Factor this into your timeline when negotiating a contract close date.
If the appraisal comes in below the purchase price, the VA's escape clause lets you walk with your earnest money if neither party will negotiate on price. Sellers who know this sometimes resist VA buyers on a tight spread. Price your offer competitively from the start and don't overpay expecting the appraisal to protect you from a bad deal.
Most VA loans close in 30 to 45 days, roughly the same timeline as a conventional loan. The big variable is appraisal turnaround. In some Texas markets, VA appraiser capacity tightens when demand spikes. Ask your lender for a realistic estimate in the specific market you're buying in.
VA rules cap what lenders can charge. Certain fees are non-allowable: escrow charges on the buyer's side, attorney opinion fees, and several documentation charges. Your lender can charge up to 1% of the loan as origination plus a list of allowable fees. Ask every lender for a Loan Estimate on the same day and compare the fee sections line by line. The rate gets most of the attention; the fees are where real differences hide.
VA loans carry no prepayment penalty. You can pay off the loan early, make extra principal payments, or refinance without a fee. That matters when rates shift and you want to move quickly.
Your entitlement isn't permanently consumed. Once you pay off a VA loan, full entitlement restores and you can reuse the benefit on the next purchase. If you sell and the buyer assumes your VA loan (VA loans are assumable by eligible buyers), your entitlement stays tied up until they pay it off or substitute their own entitlement. Don't let someone assume your loan without sorting out the entitlement release first; get your lender's paperwork on it before you agree to an assumption.
If rates drop and you already own a home with a VA loan, the VA IRRRL streamline refinance is the fastest refi path. No new appraisal required in most cases. The funding fee drops to 0.5%, substantially below a purchase fee.
The benefit is for primary residences only. You can't use a VA loan to buy a vacation home or a pure investment property. A duplex, triplex, or four-unit building qualifies if you live in one of the units. Commercial property doesn't qualify.
Certain property types have additional requirements. VA manufactured home loans require the unit to be permanently affixed and classified as real property, not personal property. VA construction loans require a VA-registered builder and a construction escrow arrangement. VA-approved condos must be on the VA's project approval list; the entire HOA development goes through VA review, not just the individual unit you want to buy. If the condo community you're interested in isn't on the list, ask the HOA whether they're willing to pursue VA project approval.
Worth being direct about: the VA loan's advantage over conventional depends partly on how long you stay. If you buy with no money down, finance the funding fee, and sell in two years before building meaningful equity, you may come out behind a conventional buyer who put 5% down and skipped the fee entirely. Run both scenarios before deciding. The VA loan works best for long-term owners and borrowers who want to preserve cash at closing.
VA loans tend to price below conventional for the same borrower profile because the guarantee reduces lender risk. The gap isn't fixed. In some rate environments it's a quarter point; in others it narrows significantly. Don't assume it without getting actual quotes. See this week's VA rate numbers on the Texas rate tracker.
The free 60-second eligibility check asks no credit pull and requires no commitment. It's the fastest way to get a lender looking at your actual numbers. We're not a lender, and nothing here is a commitment to lend. This site connects veterans with licensed Texas mortgage professionals who are not affiliated with the VA or any government agency.
See what you qualify for in 60 seconds, free and no credit check. Use the eligibility check at the top of this page.
No. The VA loan allows zero down payment up to the conforming loan limit in your county, which is $766,550 in most Texas counties for 2024. Go above that limit and you'll need to bring 25% of the excess amount to closing.
The funding fee is a one-time charge that replaces private mortgage insurance. For first-time users with no down payment, it's 2.15% of the loan amount. Veterans receiving VA disability compensation at any rating pay nothing. The fee can be rolled into the loan balance.
Yes. Your entitlement restores once a VA loan is paid off. You can also have two VA loans active at the same time if you have enough remaining entitlement, which some veterans use when keeping a first home as a rental while buying a new primary residence.
MPRs are basic standards the home must meet for safety, soundness, and sanitation. Common Texas issues include aging roofs, failing HVAC, foundation drainage problems, and exposed wiring. Sellers can fix them or credit you at closing to clear the appraisal.
The VA loan is the federal program available nationwide. The Texas Vet Loan is a separate program run by the Texas Veterans Land Board that can offer a below-market rate on certain loan amounts. Some veterans can combine both benefits. Our Texas Vet Loan vs VA loan guide covers the difference in detail.
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