What does "Veterans Affairs (VA) loan" mean?

To be eligible for a VA loan, you must be an active-duty service member, a veteran, or an eligible spouse. You need to meet specific service requirements, such as 90 days of active duty during wartime or 181 days during peacetime. Additionally, you must obtain a Certificate of Eligibility (COE) from the VA to demonstrate your eligibility.

The costs associated with getting a VA loan include a funding fee, which is typically 2.3% of the loan amount for first-time users and may vary for subsequent use. Additionally, borrowers are responsible for closing costs, which can range from 2% to 5% of the loan amount. No down payment is required for eligible borrowers.

The VA loan process differs from a conventional mortgage primarily in that VA loans do not require a down payment, whereas conventional mortgages typically require at least 3% to 20%. Additionally, VA loans have no private mortgage insurance (PMI) requirement, while conventional loans often require PMI if the down payment is less than 20%. VA loans also have specific eligibility requirements related to military service.