VA loans tips can make the difference between a smooth home purchase and a costly mistake. For veterans, active-duty service members, and eligible spouses, VA loans offer one of the best paths to homeownership, no down payment, no private mortgage insurance, and competitive interest rates. But getting the most out of this benefit takes some know-how.
This guide covers the essential VA loans tips every military homebuyer should know. From eligibility requirements to rate shopping strategies, these practical insights help borrowers avoid pitfalls and maximize their benefits.
Key Takeaways
- VA loans offer no down payment, no private mortgage insurance, and competitive rates, but maximizing these benefits requires understanding key eligibility and strategy tips.
- Always obtain your Certificate of Eligibility (COE) early—lenders can often pull it instantly, speeding up your application process.
- Shop around and compare Loan Estimates from at least three to five lenders to secure the best VA loan rates and lowest closing costs.
- Check if you’re exempt from the VA funding fee, which can save you thousands—veterans with disability compensation and certain surviving spouses qualify.
- VA loan benefits can be used multiple times; after selling a home and paying off the loan, you can restore full entitlement for future purchases.
- Negotiate seller concessions of up to 4% of the purchase price to reduce out-of-pocket closing costs in buyer-friendly markets.
Understanding VA Loan Eligibility Requirements
Before applying for a VA loan, borrowers must confirm their eligibility. The Department of Veterans Affairs sets specific service requirements that determine who qualifies.
Service Requirements
Veterans typically need 90 consecutive days of active service during wartime or 181 days during peacetime. National Guard and Reserve members must complete six years of service or 90 days of active duty under Title 10 orders. Surviving spouses of service members who died in the line of duty or from a service-connected disability may also qualify.
The Certificate of Eligibility (COE)
The COE proves a borrower’s entitlement to VA loan benefits. Lenders require this document before processing an application. Veterans can obtain their COE through the VA’s eBenefits portal, by mail using VA Form 26-1880, or through their lender.
Many lenders can pull the COE instantly during the application process. But, some borrowers, especially those with complex service records, may need to submit documentation directly to the VA.
Entitlement Basics
Full entitlement means borrowers can purchase a home with no down payment, regardless of price. Partial entitlement applies when a borrower has an existing VA loan or has defaulted on one previously. Understanding entitlement status helps buyers plan their purchase and avoid surprises at closing.
One often-overlooked VA loans tip: entitlement can be restored after selling a home and paying off the original VA loan. This allows veterans to use the benefit multiple times throughout their lives.
How to Get the Best VA Loan Rates
VA loan rates are generally lower than conventional mortgage rates, but they still vary between lenders. Smart borrowers shop around to find the best deal.
Compare Multiple Lenders
Different lenders offer different rates, fees, and closing costs. Borrowers should get quotes from at least three to five lenders, including banks, credit unions, and mortgage companies that specialize in VA loans. Each lender sets its own rates based on market conditions and internal policies.
The Consumer Financial Protection Bureau recommends comparing Loan Estimates side by side. These standardized documents show the interest rate, monthly payment, and total closing costs for each offer.
Improve Credit Before Applying
While VA loans don’t have a minimum credit score requirement from the VA itself, most lenders require scores of 620 or higher. Borrowers with scores above 740 typically receive the best rates.
Simple VA loans tips for boosting credit include paying down credit card balances, disputing errors on credit reports, and avoiding new credit applications in the months before applying for a mortgage.
Consider Discount Points
Buyers can pay discount points to lower their interest rate. One point costs 1% of the loan amount and typically reduces the rate by 0.25%. This strategy makes sense for borrowers who plan to stay in the home long enough to recoup the upfront cost through monthly savings.
Lock the Rate at the Right Time
Mortgage rates fluctuate daily. Once a borrower finds a good rate, they should consider locking it in. Most rate locks last 30 to 60 days. If rates drop significantly before closing, some lenders offer float-down options that allow borrowers to take advantage of lower rates.
Avoiding Common VA Loan Mistakes
Even experienced homebuyers make errors that cost them money or delay their closing. These VA loans tips help borrowers sidestep the most frequent pitfalls.
Skipping the VA Appraisal Process
VA loans require a property appraisal by a VA-approved appraiser. This appraisal determines the home’s market value and ensures it meets Minimum Property Requirements (MPRs). Some buyers rush to make offers without understanding that properties must pass this inspection.
Homes with safety issues, structural problems, or inadequate heating may not meet MPRs. Buyers should factor potential repair costs into their budget or negotiate repairs with the seller before closing.
Ignoring the Funding Fee
Most VA loans include a funding fee that ranges from 1.25% to 3.3% of the loan amount. This fee funds the VA loan program and reduces costs for taxpayers. First-time users with no down payment pay 2.15%, while subsequent users pay 3.3%.
Some borrowers are exempt from the funding fee, including veterans receiving VA disability compensation and surviving spouses of veterans who died in service. Checking exemption status is one of the most valuable VA loans tips, it can save thousands of dollars.
Overextending Financially
Just because the VA allows 100% financing doesn’t mean buyers should max out their budget. Smart borrowers leave room for maintenance costs, property taxes, and unexpected expenses. A general rule: total housing costs shouldn’t exceed 28% of gross monthly income.
Maximizing Your VA Loan Benefits
VA loans offer advantages beyond the initial purchase. Understanding the full scope of benefits helps borrowers get more value from their service.
Use the Benefit More Than Once
VA loan benefits aren’t one-time perks. Veterans can use them repeatedly as long as they have remaining entitlement. After selling a home and paying off the VA loan, borrowers can restore their full entitlement and purchase another property.
Even with an existing VA loan, borrowers may qualify for a second VA loan if they have remaining entitlement. This option works well for service members who receive PCS orders and want to rent out their current home while buying in a new location.
Refinance with a VA Streamline
The Interest Rate Reduction Refinance Loan (IRRRL), often called the VA Streamline, lets existing VA loan holders refinance with minimal paperwork. No appraisal or income verification is required in most cases. Borrowers can lower their interest rate or switch from an adjustable-rate to a fixed-rate mortgage quickly.
Take Advantage of Assumability
VA loans are assumable, meaning a qualified buyer can take over the existing loan terms. In a high-rate environment, this feature adds significant value to a home. Sellers with low-rate VA loans may attract more buyers and command higher prices.
Negotiate Seller Concessions
VA loans allow sellers to pay up to 4% of the purchase price toward buyer concessions. This money can cover closing costs, prepaid taxes, and other expenses. In buyer-friendly markets, negotiating seller concessions is one of the most practical VA loans tips for reducing out-of-pocket costs.
