The VA loan is the only mainstream mortgage program that routinely lets people buy a house with nothing down and no monthly mortgage insurance. About nine in ten VA purchases close with zero down payment. That’s not a marketing line; it’s how the program is built.
What trips people up isn’t the down payment. It’s everything on the eligibility sheet around it. A veteran assumes they qualify, then gets surprised by a $7,500 funding fee, a residual income calculation nobody mentioned, or an appraiser who flags peeling paint on a detached garage. Here’s the sequence of requirements you’ll actually run into, in the order they come up.
First comes the service requirement, not the money
Before a lender looks at your credit or your bank statements, you need to clear the VA’s service threshold. The rules differ depending on how you served:
- Wartime active duty: 90 consecutive days of active service.
- Peacetime active duty: 181 consecutive days.
- National Guard or Selected Reserve: six years of service, or 90 days of active-duty service under Title 32.
- Discharge status: honorable or general under honorable conditions. A dishonorable discharge disqualifies you.
Active-duty service members can apply while still serving. So can members of the National Guard and Reserve who have never been federally activated, provided they’ve hit the six-year mark.
Surviving spouses qualify too, with conditions
An unremarried surviving spouse of a veteran who died in service, or from a service-connected disability, can use the benefit. So can a spouse who remarried after turning 57. If you receive Dependency and Indemnity Compensation, the funding fee is waived entirely.
The Certificate of Eligibility is step one, and it’s fast
Your COE is the document that proves to a lender that you’re entitled to the benefit. You can request it through VA.gov, and most people get an answer in minutes. You’ll need your DD-214 or, for Guard and Reserve members, a Statement of Service. Many lenders will pull the COE on your behalf during pre-approval, which means you may never have to think about it.
The COE also tells you something important: whether you have full entitlement or only partial. If you’ve paid off a previous VA loan, you generally get that entitlement restored. If you still have an active VA loan and want another one, you’re working with second-tier entitlement and a county-level limit applies.
Credit score and debt: the requirements VA doesn’t publish
The VA itself does not set a minimum credit score. Lenders do. Most set the floor at 620, some go down to 580, and a handful hold out for 660. The practical answer is that the VA’s rulebook and your lender’s rulebook are two separate documents, and you need to satisfy both.
Debt-to-income works the same way, with a twist. The VA’s guideline is 41%, but lenders can and do approve borrowers well above that, sometimes into the low 50s. The reason is that the VA cares less about the ratio and more about what’s left over.
Residual income is the number that actually decides it
Residual income is what remains after your mortgage payment, taxes, insurance, car loans, student loans, and minimum credit card payments come out of your take-home pay. The VA publishes a table of minimums that varies by region and household size. Depending on where you live and how many people are in the home, the required figure usually lands somewhere between roughly $500 and $1,100 a month.
Here’s how it plays out. A family of four in the Midwest brings home $6,400 a month. Their housing payment and all other debts total $3,900, leaving $2,500 in residual income. Their regional requirement is around $1,000, so they clear it with room to spare. A single borrower in a high-cost county with the same income and a bigger mortgage payment could fail the same test even with a comfortable-looking salary.
Zero down, but the funding fee is real money
The funding fee is how the VA keeps the program running without charging monthly insurance. It’s a one-time charge, and it scales with how much you put down and whether you’ve used the benefit before:
- First VA loan, nothing down: 2.15% of the loan amount
- First VA loan, 5% down: 1.50%
- First VA loan, 10% or more down: 1.25%
- Second or later VA loan, nothing down: 3.30%
On a $350,000 purchase with nothing down, that’s $7,525. Most borrowers roll it into the loan rather than paying it at closing, which means you’re financing it over 30 years. You’re exempt if you have a service-connected disability rating and receive compensation, or if you’re a surviving spouse receiving DIC. Purple Heart recipients on active duty are exempt as well.
Set that fee against what you’d pay for mortgage insurance elsewhere. A conventional loan at 5% down on the same $350,000 typically carries $150 to $200 a month in PMI until you build enough equity to drop it. Over seven years, that’s more than the VA funding fee. The math shifts depending on your down payment and credit profile, and it’s worth running both scenarios to see where the money actually moves between a VA loan and a conventional one before you commit.
The house has to qualify, not just the borrower
This is the section that kills deals. The VA requires the property to meet Minimum Property Requirements, and the appraisal is ordered through a VA-assigned appraiser rather than anyone your realtor recommends. Common sticking points include:
- Peeling or chipped exterior paint, especially on older homes
- A roof with less than a few years of remaining life
- Missing handrails on stairs with four or more risers
- No working heat source, or a heating system that’s been disconnected
- Evidence of active termite or wood-destroying insect damage
- Exposed wiring, double-tapped breakers, or missing outlet covers
- Inadequate water supply or a failing septic system
None of this is cosmetic preference. It’s a safety and livability standard, and a fixer-upper with good bones can still fail on a $400 paint job. If the appraiser flags something, you’ll get a chance to respond through the Tidewater process before the report is finalized. It’s a similar inspection mindset to what a conventional appraiser checks for, though the VA’s list is stricter and less negotiable.
Occupancy, property type, and the fine print
A VA loan is for a primary residence. You have to move in within 60 days of closing and intend to live there. That rules out buying an investment property or a vacation home with the benefit.
You can, however, buy a two-, three-, or four-unit building as long as you occupy one of the units. That opens up house hacking, where rental income from the other units offsets your payment. Financing a multi-unit property changes the underwriting in specific ways, and much of the logic that applies to a duplex on a conventional loan carries over to the VA version.
Other details worth knowing: there’s no loan limit for borrowers with full entitlement, a rule that took effect in 2020. Seller concessions are capped at 4% of the loan amount. There’s no prepayment penalty. And VA loans are assumable, which means a buyer can take over your loan at your original interest rate. In a market where rates have climbed, that’s a genuine selling point.
When a VA loan isn’t the right answer
The program is generous, but it isn’t universally the cheapest option. If you have 20% down and a 780 credit score, a conventional loan may cost less over 30 years once you account for the funding fee, even though you’d pay PMI-free on both. Sellers in tight markets occasionally hesitate at VA offers, usually out of unfounded worry about the appraisal contingency, and that friction is real even when the concern isn’t. And if the home you want needs substantial work, the property standards can stop the deal cold.
It’s worth pricing two or three loan types side by side rather than defaulting to the one you’ve heard about. Comparisons like the real cost of the 20% down myth on conventional loans and how FHA and conventional loans diverge by year five make the trade-offs concrete instead of theoretical.
One last piece of practical advice. Pull your COE before you talk to a lender, order your DD-214 if you don’t have a copy, and check your credit reports for anything that needs cleaning up. Walking into pre-approval with those three items handled turns a two-week process into a two-day one.