Questions Everyone Asks About VA Home Loans

Home loans from Veterans Affairs offer great terms for military service members and former members. They can make it more affordable for many veterans to own a home — just one of the many ways to say “thank you” for their service.

Yet VA loans do have many qualifying criteria and guidelines for use. So some veterans may not apply for them because they don’t understand the process.

Here are the answers to some common questions about VA loans to make them a little easier to understand:

Can I Use a VA Loan to Buy a Fixer-Upper?

No, you can’t. VA loans can only be used to buy a home that is move-in ready. In fact, the VA establishes minimum requirements for the properties it will finance, and they are quite extensive.

“Move-in ready” does not refer to aesthetic issues like the color of paint or having an outdated floor. Primarily, the minimum requirements revolve around the safety, sanitation, and structural integrity of the house. So it would be a problem if the walls had mold, but not if they were neon green. It would be a problem if the floors or subfloor were rotting, not if there was an old pink tile floor in the bathroom.

While some minimum requirements might come as a surprise to buyers, they are generally common sense. Therefore, you should not let the fear that a home will pass VA muster to try for a VA loan. Instead, work with an experienced realtor to give you a realistic appraisal of each home you are considering.

Do I Have to Go to the VA to Apply for These Loans?

No. In fact, the VA doesn’t even finance these loans. Private lenders finance the loans, and the federal government guarantees the loans. Since lenders have lower risk on the loans with the government backing, they are able to offer lower interest rates and fees.

VA loans have special set rates just like prime home loans. Click here to see the current rates for VA home loans.

Is the Application Process Very Complicated?

It is no more complicated than a standard home loan application. You have to fill out all the same information—such as your income and debts—and then you have to complete the additional step of proving to your eligibility as a service member.

Typically, a lender can determine your VA eligibility within moments. The lender requests your Certificate of Eligibility (COE) electronically from the VA, and it usually comes back right away. 

To be eligible for a VA loan, you have to show more than that you served in the military. You have to show that you did at least one of the following:

  • Served 90 days of active duty during wartime
  • Served 181 days of active duty during peacetime
  • Served 6 years in the National Guard or Reserves

People whose spouses died in the line of military duty are also eligible for these loans. Checking VA eligibility does not cost any money, so it is worth asking your lender to run the check if you have served.

Do I Have to Pay VA Funding Fees in Cash?

Just like any home loan, you have to pay fees to originate a VA home loan. These fees vary, and they can be rolled into the loan financing rather instead of paying upfront like some other loan costs.

Typically, the fee for a VA loan is 2.15 percent—or $2,150 for every $100,000 of the loan. However, if you pay more money down, you can get a lower percentage rate. If you have more military service or you are applying for your first VA loan, you may also pay a lower rate.

The fees for VA loans can range from 1.25 percent to 3.3 percent. However, if you were injured in the line of duty, you may be able to get the loan without having to pay any fee at all.

What is the Loan Limit for a VA Home Loan?

The VA loan limit varies depending on where you live and what type of home you want to buy. For example, in Durham, NC, the VA loan limit is $417,000 for a single-family home. The limit is $533,850 for a duplex, and it goes up from there for additional units.

Of course, limits also vary based on your particular financial situation, such as your income and your current debts. You can check the standard limits by location here.

If you have other questions about VA home loans, it is important that you meet with a qualified lender and talk through the criteria. If you qualify, a VA loan is a great option to get a wonderful home for an affordable price. You’ll be able to save a lot with the lower interest rate. So if you’re a veteran, it is well worth exploring this option with your lender.