Top 25 VA Loan Tips Revealed & Explained!

Today, we’ll reveal and explain our list of the top 25 VA loan tips every veteran and dependent should know about!

Some of the best features of VA home loan benefits include (#1) No down payment, (#2) Competitively low interest rates, (#3) Lower closing costs, (#4) No Private Mortgage Insurance (PMI), and (#5) lifetime benefits that can be used multiople times.

You can check your VA Loan Eligibility here.

You can also check out the official VA Loan Buyers guide here.

List of the Top 25 VA Home Loan Tips

• Understand VA Loan Benefits
• Check Eligibility
• Obtain a VA Certificate of Eligibility (COE)
• Shop Around for a Good VA Lender
• Get Pre-Approved
• Know Your Budget
• Factor in Closing Costs
• Negotiate Seller Concessions
• Consider a VA Streamline Refinance (IRRRL)
• Select a VA-Approved Property
• Familiarize Yourself with Property Requirements
• Don’t Skip the Home Inspection
• Consider VA Jumbo Loans
• Stay Informed About VA Loan Limits
• Avoid Making Major Financial Changes
• Maintain Good Credit
• Save for Reserves
• Understand Funding Fees
• Explore Down Payment Options
• Keep Debt-to-Income Ratio in Check
• Be Prepared for VA Appraisal
• Consider VA Energy-Efficient Mortgages
• Stay Informed About VA Loan Changes
• Seek VA Loan Assistance Programs
• Work with VA Loan Specialists

#1. Understand VA Loan Benefits

VA loans are a type of mortgage loan available to United States veterans, active-duty service members, and certain military spouses. They are issued by private lenders and partially backed by the U.S. Department of Veterans Affairs (VA). The primary advantages include:

• No Down Payment Requirements: VA loans are one of the few mortgage options that don’t require a down payment, making homeownership more accessible.

• Competitive Interest Rates: Generally lower than those of conventional loans because the VA backs a portion of the loan, reducing the lender’s risk.

• Relaxed Credit Score Requirements: VA loans are more forgiving regarding credit history and scores, focusing more on the overall creditworthiness and the ability to repay the loan.

#2. Check Eligibility

Eligibility for a VA loan is based on service duration, duty status, and character of service. First, you must have been discharged from the military without an Other Than Honorable, Bad Conduct, or Dishonorable discharge. Find out how to upgrade your discharge status. Second, there are 8 categories that qualify for VA loan eligibility:

• (#1) Active Duty Servicemember
• (#2) Veteran
• (#3) National Guard on Active Duty Orders
• (#4) Reserve on Active Duty Orders
• (#5) Reserve and National Guard Service Members
• (#6) Reserve and National Guard Veterans
• (#7) Eligible Spouses
• (#8) Other Eligible Borrowers

>> Click here to read the detailed VA loan eligibility requirements

#3. Obtain a VA Certificate of Eligibility (COE)

A VA Certificate of Eligibility (COE) is a document from the VA that verifies a borrower’s eligibility for a VA loan. Obtaining a COE is a critical step in the loan process, and applicants can apply through the VA website, mail, or through their lender, which is often faster.

Pro Tip: You do not need a VA COE to get started! You can still get pre-approved without a COE as your VA loan eligibility will be verified separately during the loan process. It’s also a myth that you need to get your COE. The truth is your mortgage lender can get a copy of your COE on your behalf.

#4. Shop Around for a Good VA Lender

Shopping around involves comparing rates, fees, and loan terms from multiple lenders. This step is essential to ensure you’re getting the best deal possible. Different lenders might offer different interest rates and terms, even for VA loans.

Shopping for a VA lender and getting pre-approved are crucial steps in securing the best terms and interest rates for your VA loan.

Here’s how to navigate this process:

• Research Lenders: Explore reputable private lenders that specialize in VA loans, such as Veterans United and Navy Federal. Consider using rate comparison websites like District Lending for free quotes.

• Compare Offers: Obtain multiple loan offers to compare rates and fees. A mortgage broker can help you access offers from various lenders with just one credit inquiry, saving time and minimizing credit impact.

• Check Lender Credentials: Verify the credibility of potential lenders by checking their records in the Nationwide Multistate Licensing System (NMLS) or the Consumer Financial Protection Bureau’s database.

• Gather Documentation: Prepare necessary documents for pre-approval, including official identification, social security number, proof of income (paystubs, W2s, or tax returns), asset statements, and debt statements.

When comparing VA loans to conventional mortgages, consider the following advantages of VA loans:

• No Down Payment: VA loans allow financing up to 100% of the property’s purchase price, eliminating the need for a down payment.

• No Private Mortgage Insurance (PMI): Unlike conventional loans, VA loans do not require PMI, saving borrowers money on insurance premiums.

• Closing Costs Cap: The VA limits or prohibit certain closing fees, resulting in potentially lower closing costs for veterans and their spouses.

• Flexible Credit Requirements: VA loans have no minimum credit score requirement and consider the borrower’s entire loan profile for approval.

• Lower Interest Rates: VA loans typically offer lower interest rates than conventional loans, reducing overall borrowing costs.

Additionally, VA loans offer specialized options such as:

• Native American Direct Loan (NADL): Lower interest rates for Native American veterans and their spouses.

• Refinancing Options: VA cash-out refinancing allows borrowers to access equity in their homes.

• Renovation Loans: VA renovation loans combine home purchase and improvement financing without requiring a down payment or PMI.

By understanding these differences and leveraging the benefits of VA loans, eligible borrowers can secure affordable homeownership with favorable terms and conditions.

#5. Get Pre-Approved

Pre-approval involves a lender evaluating your financial situation to determine how much they would be willing to lend you. This step is crucial before house hunting, as it gives you a clear idea of your budget and makes you a more attractive buyer to sellers.

Submit your documentation to your chosen lender to get pre-approved. This step allows you to know your budget and make competitive offers in a fast-paced housing market.

District Lending can help you get a quote and move to pre-approval for a VA loan fast!

#6. Know Your Budget

Understanding your budget means considering your income, expenses, and lifestyle to determine how much you can comfortably afford to borrow and repay. It’s essential to not overextend yourself financially, even with the benefits of a VA loan.

>> Use our free Mortgage Calculator!

#7. Factor in Closing Costs

While VA loans often have lower closing costs than conventional loans, borrowers still need to be prepared for expenses such as appraisal fees, title insurance, origination fees, etc. These costs can add up and need to be budgeted for.

Pro Tip: While it’s true that there’s no down payment requirement on a VA loan, you’re still responsible for certain closing costs, including the following: loan origination fees, application fees, discount points (if desired), hazard insurance, real estate taxes, title insurance, recording fees, appraiser fees, and home inspection fees.

#8. Negotiate Seller Concessions

VA loans allow sellers to pay for some or all a buyer’s closing costs, up to a certain percentage of the loan amount. This can be a point of negotiation when making an offer on a home.

>> Read more about VA loan seller concessions and closing costs

#9. Consider a VA Streamline Refinance (IRRRL)

The Interest Rate Reduction Refinance Loan (IRRRL) is a VA program that allows veterans to refinance their existing VA loan to a lower interest rate with minimal paperwork, potentially lowering monthly payments.

#10. Select a VA-Approved Property Type

First, it’s crucial to understand that VA loans are intended for primary residences only. Vacation homes or investment properties are not eligible for VA financing. Additionally, not all condos may meet VA requirements, so thorough research is necessary.

VA-Approved Property Types and Requirements:

• Multiunit Homes: While duplexes, triplexes, and four-plexes can qualify for VA loans, at least one unit must serve as the borrower’s primary residence. You can get creative here, but the point is you must live in one of the units.

• Mobile Homes: Mobile homes must meet specific criteria, including being securely attached to a permanent foundation and meeting minimum size and facility requirements. For example, single-wide mobile homes must have a minimum size of 400 square feet, while double-wide homes must be at least 700 square feet. Additionally, all mobile homes must include permanent facilities for cooking, sleeping, eating, and sanitation.

• New-Build Homes: Newly constructed homes can qualify for VA loans; however, they must undergo three separate inspections to verify compliance with VA standards for builders, plans, and building sites. In addition, builders are required to offer a minimum one-year warranty for these new homes.

• Modular Homes: To be eligible for a VA loan, modular homes must be securely attached to a permanent foundation. Moreover, they must adhere to either Department of Housing and Urban Development (HUD) guidelines or obtain certification from the state where they were constructed.

• Condominiums: To be approved for VA financing, condominiums must meet specific criteria: (1) The condo building must consist of more than one unit, (2) No single individual, investor, or entity can own more than 10% of the units in the building, (3) Only 50% of the units in the condo building can be rented to tenants, and (4) At least 85% of condo owners must be current with their homeowners’ association fees. You can do this by requesting a customized condo report here.

#11. Familiarize Yourself with VA Property Requirements

VA loans require that the property meets specific safety, sanitation, and structural integrity standards. These requirements ensure that the property is a safe and sound investment.

#12. Don’t Skip the Home Inspection

A home inspection is a detailed examination of the property’s condition. It’s crucial to identify any potential issues that might not be apparent during an appraisal, providing an additional layer of protection for the buyer.

#13. Consider VA Jumbo Loans

For those looking to purchase a higher-priced home, VA jumbo loans allow borrowers to exceed the standard VA loan limits, albeit usually with some down payment based on the portion exceeding the limit.

#14. Stay Informed About VA Loan Limits

VA loan limits dictate the maximum loan amount you can borrow without a down payment, varying by county. Knowing these limits is essential, especially if you’re looking in a high-cost area.

#15. Avoid Making Major Financial Changes

Significant financial changes can impact your loan eligibility and approval. Lenders prefer stability, so it’s best to avoid changing jobs, making large purchases, or taking on new debt during the loan process.

#16. Maintain Good Credit

Although VA loans have relaxed credit requirements, a higher credit score can secure better loan terms. It’s advantageous to manage your credit responsibly.

Pro Tip: The VA loan program does not have a minimum credit score requirement. However, private lenders will use your credit score to determine the terms of your deal, the higher your credit score, the better deal you’ll receive.

#17. Save for Reserves

Some lenders may require reserves for savings set aside to cover future mortgage payments. Having several months’ worth of payments saved can be beneficial.

#18. Understand Funding Fees

VA loans come with a funding fee, which varies based on factors like military service and down payment amount. This fee helps fund the VA loan program and is usually rolled into the loan amount. VA funding fees range from 0.5% to 3.3% depending on the loan type and your individual circumstances.

You don’t have to pay the VA funding fee if any of these situations apply to you:

• You’re receiving VA compensation for a service-connected disability, or

• You’re eligible to receive VA compensation for a service-connected disability, but you’re receiving retirement or active-duty pay instead, or

• You’re receiving Dependency and Indemnity Compensation (DIC) as the surviving spouse of a Veteran, or

• You’re a service member who has received a proposed or memorandum rating before the loan closing date that says you’re eligible to get compensation because of a pre-discharge claim, or

• You’re a service member on active duty who, before or on the loan closing date, provides evidence of having received the Purple Heart

VA Funding Fee Refund Process

You may be eligible for a refund of the VA funding fee if you’re later awarded VA compensation for a service-connected disability. The effective date of your VA compensation must be retroactive to before the date of your loan closing. 

If you get a proposed or memorandum rating after your loan closing date, you’ll still need to pay the funding fee. You won’t be eligible for a refund based on this rating.

If you think you’re eligible for a refund, please call your VA regional loan center at 877-827-3702 (TTY: 711).  

Pro Tip: The VA loan funding fee applies only to the loan amount, not the purchase price of the home. Let’s say you’re using a VA-backed loan for the first time, and you’re buying a $300,000 home with a down payment of $15,000 (5% of the $300,000 purchase price). You’ll pay a VA funding fee of $4,275, or 1.5% of the $285,000 ($300,000 – $15,000 = $285,000) loan amount.

#19. Explore Down Payment Options

While not required for most borrowers, making a down payment on a VA loan can reduce your funding fee, lower your monthly payments, and decrease the overall cost of the loan. With interest rates on the higher side right now, it might make sense for you to lower the overall loan costs.

#20. Keep Debt-to-Income Ratio in Check

Your debt-to-income ratio (DTI) is a key factor lenders use to determine your ability to repay the loan. It compares your total monthly debt payments to your gross monthly income. A VA loan DTI ratio below 41% is typically desired by lenders to improve your approval chances.

#21. Be Prepared for VA Appraisal

A VA appraisal is mandatory for a VA loan and serves two purposes: to assess the property’s fair market value and to ensure it meets the VA’s minimum property requirements. Understanding the appraisal process and its potential impact on your loan approval is crucial.

#22. Consider VA Energy-Efficient Mortgages

VA Energy-Efficient Mortgages (EEMs) allow borrowers to finance cost-effective, energy-saving improvements as part of their VA loan. This can lead to savings on utility bills and contribute to environmental conservation.

#23. Stay Informed About VA Loan Changes

The VA loan program’s policies and regulations can change. Staying informed about these changes ensures that you can take full advantage of the program’s benefits and avoid any surprises during the loan process.

#24. Seek VA Loan Assistance Programs

Some states and local governments offer additional assistance programs for veterans and military personnel, such as down payment assistance or reduced interest rates. These programs can provide valuable support in addition to the benefits of a VA loan.

#25. Work with VA Loan Specialists

Choosing a lender with experience in handling VA loans can make the borrowing process smoother and more efficient. VA loan specialists are familiar with the unique requirements and benefits of VA loans and can provide guidance tailored to your military service background.

Want to Use Your VA Loan? WE CAN HELP!

• District Lending is on a mission to disrupt the traditional mortgage industry. Buying a home can be incredibly frustrating so we decided to make it EASY through our technology and exceptional customer service! We can help you save money and close fast with your VA loan. Click here to get in touch with us.

• Lower rates. Zero lender fees. As a mortgage broker, we have access to over 50 lenders. This means that you have more options to choose from, making it easier to find the perfect loan. What makes us different is that we’re able to offer great low rates to consumers every single day (we have very low overhead with no layers of overpaid middle management). Check Today’s Rates Now!

• We’re extremely fast to close, but never cut corners. We’ve engineered our process to close a loan in as little as 18 days. We also monitor our competitors’ rates and always make sure ours are lower.

>> Click HERE to get a great low VA mortgage rate in 60 seconds or less!

“After working in the mortgage industry for 20 years, I started District Lending to deliver consumers lower rates and to arm them with the power to make confident financial decisions. That’s also why I’m keen on making the buying and refinancing experience as seamless and stress-free as possible. I value honesty, so I gladly share my rates with consumers right on the website. Our service is transparent, and we prioritize looking out for the client’s best interest.”

– Josh Rapaport, CEO and Co-Owner, District Lending

“As a military veteran, I’ve made it my life’s mission to help people live happier and wealthier lives. District Lending brings this mission to life. We believe in integrity, honesty, and transparency, which is why you’ll see our rates right on our website. You’ll find lower rates and zero lending fees, which means you can buy your dream home for less. The savings are passed on to you — the way it should be.”

– Brian Reese, Advisor and Co-Owner, District Lending

About the Author

Brian Reese is a senior advisor and co-owner at District Lending. He is one of the world’s leading experts in veteran benefits, having helped millions of veterans secure their financial future since 2013. Brian is the founder VA Claims Insider, an education-based Coaching & Consulting company whose mission is to educate and empower veterans to get the VA disability benefits they’ve earned for their honorable service. A former active-duty air force officer, Brian deployed to Afghanistan in support of Operation Enduring Freedom. He is a distinguished graduate of management of the United States Air Force Academy and earned his MBA as a National Honor Scholar from the Spears School of Business at Oklahoma State University.