VA Loans Guide for Eligible Veterans from Coventry Enterprises of America

VA loans are one of the most powerful financial benefits available to eligible veterans, active-duty service members, and surviving spouses. No down payment, no private mortgage insurance, and competitive interest rates. Coventry Enterprises of America explains how the program works and what to watch for.

Eligibility Basics

VA loan eligibility is based on service history. Generally, veterans who served 90 consecutive days during wartime or 181 days during peacetime qualify, as do active-duty members with 90 days of continuous service. National Guard and Reserve members may qualify after 6 years of service or 90 days of active-duty service under Title 10 orders. The first step is obtaining your Certificate of Eligibility (COE) from the VA or through your lender.

The Core Benefits

No down payment is required on most VA loans, though borrowers can choose to put money down to reduce the funding fee or the monthly payment. There is no private mortgage insurance requirement, which saves $100 to $400 per month compared to low-down-payment conventional loans. VA loans also have competitive rates, typically slightly below conventional rates for similar borrowers.

The VA Funding Fee

The VA funding fee is a one-time charge that helps fund the VA loan program. For first-time VA loan users with no down payment, the fee is 2.15 percent of the loan amount. For subsequent use, it is 3.3 percent. The fee can be financed into the loan or paid at closing. Some borrowers are exempt from the funding fee entirely: veterans receiving VA disability compensation and surviving spouses of veterans who died in service or from service-connected disabilities.

VA Loan Limits and Entitlement

Since 2020, VA loan limits based on county have been eliminated for borrowers with full entitlement. If you have never used your VA benefit before or have paid off a previous VA loan in full, you have full entitlement and can borrow as much as a lender will approve without a down payment. Borrowers with remaining entitlement (partial) may face county loan limits depending on circumstances.

VA Loan Pitfalls to Avoid

Some lenders target veterans with VA cash-out refinance offers that reset the loan term, increase the total cost, or charge high fees while providing minimal benefit. The VA has an "net tangible benefit" test for some refinance types, but not all. Never refinance your VA loan without running the break-even calculation and comparing the total cost to your current loan's remaining cost.