VA loan requirements: eligibility, entitlement, the funding fee and residual income
The VA does not lend money. It guarantees a portion of a loan made by an ordinary lender, and that guaranty is what lets the lender skip the down payment and the monthly mortgage insurance. Every requirement below flows from protecting that guaranty — starting with proving you are entitled to it.
Eligibility: service first, then a Certificate of Eligibility
Service requirements vary by era and by component, which is why the paperwork settles the question rather than a rule of thumb. As the VA states them: veterans who served in the Gulf War period through the present generally need at least 24 continuous months, or the full period of at least 90 days for which they were called to active duty. Current service members generally need 90 continuous days. National Guard and Reserve members qualify with at least 90 days of non-training active-duty service, or six creditable years with continued service or an honorable discharge. Some surviving spouses qualify — typically those receiving or eligible for Dependency and Indemnity Compensation, or married to a service member missing in action or held prisoner of war.
The document that proves it is the Certificate of Eligibility (COE). You can request it on VA.gov, or your lender can pull it electronically in minutes through the VA portal — usually the faster route. Earlier service eras have their own thresholds, so if you served before the Gulf War period, check your specific dates rather than assuming. The veterans and service members page covers the benefit in the wider context of buying.
The funding fee
There is no monthly mortgage insurance on a VA loan. Instead there is a one-time funding fee, which most borrowers finance into the loan. For a purchase, as of 2026:
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5% to 9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
An interest rate reduction refinance (IRRRL) carries a 0.5% fee. On a $350,000 first-use purchase with nothing down, the fee is about $7,525 — financed, that adds roughly $48 a month at an illustrative 6.5% rate. Compare that to the $150 to $250 a month a comparable conventional loan with 3% down would charge in PMI, and the arithmetic usually favors VA even for a borrower who could put money down.
The fee is waived entirely for veterans receiving VA compensation for a service-connected disability, for those eligible for it but receiving retirement or active-duty pay instead, for surviving spouses receiving DIC, for active-duty service members who received a Purple Heart on or before closing, and for service members with a proposed or memorandum rating before discharge. If a rating is granted after closing, a refund of the fee may be available — ask the lender and the VA regional loan center rather than assuming it happens automatically.
Entitlement, and why there is no loan limit
Entitlement is the dollar amount of the guaranty. Basic entitlement is $36,000, with an additional tier for larger loans, and the VA generally guarantees 25% of the loan. Since January 1, 2020, a borrower with full entitlement — no other VA loan outstanding, no prior VA foreclosure — faces no VA loan limit at all. The cap is whatever the lender will underwrite and what your income supports.
Partial entitlement is the complicated case: you already have a VA loan, or you had a VA foreclosure that consumed part of it. Then the county conforming loan limit comes back into play. The arithmetic lenders use: 25% of the county limit, minus the entitlement already tied up, is the guaranty available; four times that number is roughly the loan you can take with nothing down. With the 2026 baseline conforming limit at $832,750, 25% is about $208,188 — so a veteran with, say, $70,000 of entitlement in use has around $138,188 of guaranty left, supporting a zero-down loan near $552,000, or a larger loan with a down payment covering 25% of the excess. Ask the lender to show that calculation on your COE before you make an offer.
Income: the 41% ratio and the residual income test
VA underwriting is unusual in looking past the debt-to-income ratio to what is left in your pocket. The DTI benchmark is 41%, and exceeding it is routinely accepted when residual income comfortably clears the requirement — a common standard is exceeding the regional figure by at least 20%.
Residual income is gross income minus federal and state taxes, minus Social Security, minus every monthly debt, minus the new housing payment, minus an estimated maintenance and utilities figure that lenders commonly compute at about $0.14 per square foot per month. What remains has to clear a table that varies by region, family size and whether the loan is above or below $80,000. For a family of four on a loan above $80,000, the requirement is on the order of $1,003 in the Midwest and South, $1,025 in the Northeast and $1,117 in the West — figures published by the VA and applied by every VA lender.
A worked example: a family of four in the South buying an 1,800 square foot home. Take-home pay after taxes of $6,200, monthly debts of $600, a housing payment of $2,300, and maintenance and utilities estimated at $252 (1,800 × $0.14). Residual income is $3,048 against a $1,003 requirement — comfortable, and the sort of file where a DTI above 41% is regularly approved. Reverse the numbers and a borrower who passes on ratio alone can still be declined, which is exactly what the test is for. Our guide to debt-to-income limits compares the programs side by side.
Credit, property and occupancy
- Credit score. The VA sets no minimum. Lenders do — commonly 580 to 620, occasionally lower at lenders that specialize in the program. Shop this specifically; it varies more between lenders than the rate does.
- The appraisal. A VA-assigned appraiser sets value and checks minimum property requirements. If the value is coming in low, the Tidewater process gives the lender a chance to submit additional comparable sales before the number is final — a protection no other program offers.
- The escape clause. Every VA purchase contract contains the VA amendatory clause: if the appraised value comes in below the contract price, the buyer may walk away and recover the earnest money, regardless of what the rest of the contract says. Our guide to the appraisal gap covers the alternatives if you would rather keep the deal.
- Fees. The VA limits what the veteran can be charged, including a 1% flat lender charge in lieu of certain itemized fees, and designates several costs as non-allowable to the borrower.
- Occupancy. Primary residence only, generally occupied within 60 days of closing — one to four units, so buying a duplex and living in one side is squarely inside the rules. There is no VA path to a pure rental purchase.
Using the benefit more than once
Entitlement is restored when the loan is paid off and the property sold, and a one-time restoration is available when the loan is paid off but the home is kept. Two VA loans can be outstanding simultaneously on partial entitlement — the common case being a permanent change of station. VA loans are also assumable: a qualified buyer, veteran or not, can take over the note at its original rate with lender and VA approval, which is worth real money when rates have risen since you closed. The catch is that your entitlement stays tied to that loan unless an eligible veteran substitutes theirs, as our guide to assumable mortgages explains.
Two closing notes. A VA loan is usually the least expensive mortgage available to anyone eligible, and our editorial review of VA loans sets out where it falls short. And if a payment problem ever arises, VA loan technicians work with servicers on behalf of borrowers — worth calling early rather than late.
Frequently asked questions
Is there a maximum VA loan amount?
Not for a borrower with full entitlement, since January 1, 2020. The lender's own underwriting and your income set the ceiling. Borrowers with partial entitlement — another VA loan outstanding, or a prior VA foreclosure — are limited by the county conforming limit arithmetic described above.
What credit score do VA lenders require?
The VA publishes no minimum; individual lenders commonly look for 580 to 620. Because the overlay belongs to the lender rather than the program, the same file may be declined at one and approved at another. Residual income and payment history often carry more weight in a VA file than the score alone.
Do I have to pay the funding fee?
Not if you receive VA compensation for a service-connected disability, are eligible for it but take retirement or active-duty pay instead, are a surviving spouse receiving DIC, or are an active-duty service member who received a Purple Heart before closing. Otherwise the fee applies and is generally financed into the loan.
Can I use a VA loan for a rental property?
Not directly. The program requires you to occupy the home as your primary residence, generally within 60 days. Buying a two- to four-unit building and living in one unit is permitted, and a home financed with a VA loan may be rented out later once occupancy has been genuinely established and circumstances change.
How long does a VA loan take to close?
Broadly the same as a conventional purchase — typically 30 to 45 days as of 2026 — with the appraisal being the most common variable, since VA assigns the appraiser and turn times differ by market. Requesting the Certificate of Eligibility early removes the one delay that is entirely within your control.
Sources
Related: USDA vs VA vs FHA vs conventional: the four loan types compared, FHA loan requirements: what HUD asks, and what your lender adds on top, Assumable mortgages: taking over a seller’s low rate, and what it really costs, Debt-to-income ratio limits by loan type — and how to lower yours. Hub: First-time buyer.