Why a VA Loan?
Why Choose a VA Loan?
Some of the Most Valuable VA Loan Benefits Can Continue Long After You Buy the Home
The VA home loan benefit can help eligible Veterans, service members and qualifying surviving spouses purchase a home with favorable financing features—and several of those benefits can continue to provide flexibility after closing.
VA financing is often known for possible no-down-payment purchasing.
But after the purchase, a VA-backed mortgage may also provide access to streamlined refinancing, flexible early repayment, assumption possibilities and future reuse of the VA home loan benefit.
Important Benefits When You Purchase
VA states that an eligible borrower may purchase without a down payment when applicable VA requirements are satisfied and the purchase price does not exceed the home's appraised value.
VA-backed mortgages do not require monthly private mortgage insurance merely because the borrower makes little or no down payment.
VA rules limit certain charges to the Veteran and permit sellers to pay allowable closing costs and certain seller concessions.
VA's guaranty reduces part of the lender's risk and can help support competitive mortgage terms.
An eligible VA purchase can potentially finance a residential property with up to four units when applicable occupancy and underwriting requirements are met.
You do not have to be purchasing your first home to use the VA home loan benefit.
The VA Interest Rate Reduction Refinance Loan—commonly called the IRRRL or VA Streamline—is designed specifically to refinance an existing VA-backed mortgage.
VA does not require a new appraisal or traditional full credit-underwriting package for a standard IRRRL.
Important exceptions and individual lender requirements can still apply.
VA does not require an appraisal for a standard qualifying IRRRL.
VA generally does not require the same traditional full credit-underwriting package used for a purchase or Cash-Out refinance.
For an IRRRL, VA generally permits certification that the borrower previously occupied the property as a home.
Allowable IRRRL costs may generally be included in the new mortgage or potentially offset through lender pricing.
Each IRRRL must satisfy applicable VA seasoning, benefit, recoupment, payment-history and other requirements.
Additional underwriting is required in certain situations, including when the existing VA mortgage is 30 or more days past due or when the new PITI payment increases by 20% or more.
Individual lenders may also impose requirements beyond VA's baseline rules.
Using VA financing once does not automatically mean the benefit is gone.
Previously used entitlement may potentially be restored, and borrowers can sometimes have remaining entitlement available even while another VA-backed mortgage remains outstanding.
The amount of available entitlement depends on the borrower's individual VA history and current Certificate of Eligibility.
Examples of How VA Entitlement May Be Used Again
Previously used entitlement may generally be restored when the property is sold and the VA-backed mortgage is paid in full.
A borrower may potentially have enough remaining entitlement to purchase another qualifying residence even while another VA-backed mortgage remains outstanding.
VA also permits a one-time restoration in certain circumstances when a prior VA loan is paid in full but the borrower keeps the property.
VA-Backed Mortgages Can Be Assumable
VA-backed mortgages generally can be assumed by a purchaser who qualifies under applicable VA assumption requirements.
An assumption means the approved buyer takes over the existing mortgage obligation rather than replacing it with an entirely new mortgage.
This can potentially be valuable when the existing mortgage terms are attractive compared with new financing available at the time of sale.
Assumptions require proper approval and qualification.
If someone assumes a VA-backed mortgage without substituting their own VA entitlement, the original Veteran's entitlement can remain tied to the mortgage until the loan is paid in full.
If an eligible Veteran with sufficient entitlement assumes the mortgage and VA approves a substitution of entitlement, the selling Veteran's entitlement may be restored.
You may make additional principal payments, sell the home, refinance or completely pay off a VA-backed mortgage early without a VA prepayment-penalty fee.
That gives homeowners flexibility if their income changes, they want to accelerate repayment or another financing opportunity becomes available.
A homeowner may voluntarily pay more than the required mortgage payment and request that applicable extra amounts be applied toward principal.
Follow the mortgage servicer's procedures so additional funds are credited as intended.
An eligible refinance may potentially shorten the contractual repayment period.
A shorter term can accelerate repayment but may substantially increase the required monthly payment.
VA evaluates the overall credit picture rather than establishing one universal minimum FICO requirement for every VA-backed mortgage.
Participating lenders can establish their own minimum scores, underwriting requirements and credit overlays.
Therefore, failing to meet one lender's credit requirement does not automatically establish that every VA lender will reach the same conclusion.
VA Rules and Lender Rules Are Not Always the Same
Private lenders actually originate most VA-backed mortgages and can establish additional requirements.
Lenders can differ in areas such as:
- Credit-score requirements
- Interest-rate pricing
- Discount points and lender credits
- Manual-underwriting policies
- Property requirements
- Loan-to-value limits
- Additional documentation
Why Work With a Mortgage Broker? →
VA Mortgage Rates Can Be Competitive — But There Is Not One VA Rate
VA's guaranty reduces part of the risk to participating mortgage lenders and can help support competitive mortgage terms.
However, VA does not set the interest rate.
Individual lenders determine the rates, discount points, lender credits and other pricing they offer.
A VA mortgage is therefore not automatically cheaper than every other mortgage program for every borrower.
Eligible homeowners may potentially use a VA Cash-Out refinance to restructure mortgage debt, refinance a qualifying non-VA mortgage into VA financing or access available home equity.
Unlike the IRRRL, VA Cash-Out requires full underwriting and a VA appraisal.
VA Can Also Provide Assistance When a Borrower Has Trouble Making Payments
VA advises Veterans who are experiencing mortgage-payment problems to work with their mortgage servicer and contact VA for assistance when appropriate.
VA loan specialists may work with the borrower and servicer regarding options intended to help address delinquency and avoid foreclosure when possible.
Available loss-mitigation or servicing options depend on the individual circumstances and applicable requirements.
Refinancing Can Change the Timing of Your Next Mortgage Payment
That does not mean mortgage payments or interest are free or forgiven.
Interest and applicable amounts are accounted for in the refinance transaction.
VA specifically warns borrowers to be cautious of refinance advertising built around claims of “skipping” mortgage payments.
What Happens to Your Old Escrow Account When You Refinance?
If your mortgage servicer holds an escrow balance for property taxes and homeowners insurance, the old escrow account is reconciled when the prior mortgage is paid off.
Under current federal servicing rules, a servicer generally must return amounts remaining in an escrow account under its control within 20 days after the mortgage is paid in full, excluding Saturdays, Sundays and legal public holidays, unless a permitted alternative applies.
An escrow refund is the return of the borrower's existing money. It is not equity cash from the refinance.
Completing an IRRRL once does not automatically prevent another IRRRL later.
Each future refinance must independently satisfy the applicable VA requirements in effect for that transaction.
Those requirements can include:
- Loan seasoning
- Payment history
- Required interest-rate or payment benefit
- Applicable recoupment requirements
- Net Tangible Benefit requirements
- Lender requirements
VA Benefits at Different Stages of Homeownership
Possible no-down-payment financing, no monthly PMI, limited closing costs and competitive VA mortgage options.
No VA prepayment penalty, potential mortgage assumption, borrower-assistance resources and the ability to make voluntary extra principal payments.
Potential access to the streamlined IRRRL or broader VA Cash-Out refinance program when applicable requirements are met.
VA entitlement may potentially be restored or remaining entitlement may allow another qualifying VA-backed purchase.
An approved qualified buyer may potentially assume the existing VA-backed mortgage.
VA provides resources for borrowers experiencing difficulty making mortgage payments.
Compare VA Refinance Options →
How to Evaluate Whether VA Financing Fits Your Situation
Explore More VA Loan Guides
Learn what affects VA mortgage pricing and how to compare offers.
Learn how the VA-to-VA streamlined refinance program works.
Learn about accessing equity or moving qualifying non-VA debt into VA financing.
Learn how remaining or restored entitlement may permit another qualifying VA purchase.
Learn why VA's credit rules and individual lender overlays are not always the same.
Learn how extra principal and refinance strategies can affect repayment.
Why Choose a VA Loan? — FAQs
What are the biggest benefits of a VA loan?
Depending on the borrower and transaction, VA-backed loans can offer possible no-down-payment purchasing, no monthly PMI, limited closing costs, competitive mortgage terms, reusable entitlement, streamlined refinancing and no VA prepayment penalty.
Do VA loans require a down payment?
Many qualified borrowers with sufficient entitlement can purchase without a down payment when the purchase price does not exceed the VA-appraised value and applicable borrower, property and lender requirements are satisfied.
Does a VA loan require monthly PMI?
No. VA-backed mortgages do not require monthly private mortgage insurance. A VA funding fee may apply unless the borrower qualifies for an exemption.
Can I use my VA home loan benefit more than once?
Potentially, yes. VA describes the home-loan guaranty as a reusable benefit. Previously used entitlement may be restored, and some borrowers may have remaining entitlement available for another qualifying purchase.
Can I have more than one VA-backed mortgage at the same time?
Potentially. If sufficient remaining entitlement is available and the borrower qualifies for the new mortgage and satisfies occupancy requirements, another VA-backed purchase may be possible.
Are VA loans assumable?
VA-backed mortgages generally may be assumed by a purchaser who satisfies applicable VA qualification and assumption requirements and receives the required approval.
Does an assumption automatically restore my VA entitlement?
No. An assumption without an approved substitution of entitlement can leave the original Veteran's entitlement tied to the mortgage. A qualifying Veteran assumer with sufficient entitlement may potentially substitute entitlement and allow restoration of the seller's entitlement.
Can I pay off a VA loan early?
Yes. VA-backed mortgages do not impose a VA prepayment penalty merely because the borrower makes extra principal payments or pays the mortgage off early.
What is a VA Streamline refinance?
A VA Interest Rate Reduction Refinance Loan is a VA-to-VA refinance designed to replace an eligible existing VA-backed mortgage under streamlined VA requirements.
Does a VA Streamline require an appraisal?
VA does not require a new appraisal for a standard IRRRL. Individual lenders or transaction circumstances can create additional requirements.
Does an IRRRL require full credit and income underwriting?
VA generally does not require the same traditional full credit-underwriting package used for a purchase or Cash-Out refinance on a standard IRRRL. Exceptions and lender-specific requirements can apply.
Can I refinance again later if mortgage rates improve?
Potentially. Completing one refinance does not automatically prevent another future IRRRL. Each transaction must independently satisfy the applicable VA seasoning, benefit, recoupment and other requirements.
Does VA establish a minimum credit score?
No. VA does not establish one universal minimum credit score for its home-loan guaranty program. Individual lenders may impose their own credit-score and underwriting requirements.
Can VA help if I have trouble making my mortgage payments?
VA provides borrower-assistance resources for Veterans experiencing mortgage-payment problems. Borrowers should contact their mortgage servicer promptly and may also contact VA for applicable assistance.
Do I really skip mortgage payments when I refinance?
No. Refinancing can change the timing between payoff of the old mortgage and the first scheduled payment on the new mortgage, but mortgage payments and interest are not simply free or forgiven.
Is an escrow refund cash from my home's equity?
No. An escrow refund is generally the return of the borrower's own money remaining in the prior mortgage's escrow account after payoff and reconciliation.
Want to See Which VA Loan Benefits Apply to You?
Request a VA loan review through VA Loan Today. Your mortgage inquiry can be referred to VA Help Center LLC to review your VA eligibility, entitlement, purchase or refinance goal, available lender options and the mortgage programs that may fit your situation.
U.S. Department of Veterans Affairs — VA home-loan benefits, purchase loans, entitlement, assumptions, borrower assistance, IRRRL and refinancing guidance.
Consumer Financial Protection Bureau — Regulation X escrow account requirements.
VA — VA-Backed Purchase Loans
VA — Home Buying Process & Benefits
VA — Eligibility & Entitlement
VA — Interest Rate Reduction Refinance Loan
VA Home Loans — IRRRL Facts
CFPB — Regulation X § 1024.34
Mortgage brokerage services, mortgage applications and loan evaluations are provided by VA Help Center LLC – NMLS #1816438.
VA Loan Today and VA Help Center LLC are not affiliated with or endorsed by the U.S. Department of Veterans Affairs or any government agency.
VA home-loan benefits are subject to borrower eligibility, available entitlement, lender underwriting, occupancy, property requirements and the requirements applicable to the individual VA mortgage program.
No-down-payment financing is not guaranteed. A down payment may be required based on entitlement, property value, purchase price, lender requirements or other transaction circumstances.
VA-backed mortgages do not require monthly private mortgage insurance, although a VA funding fee may apply unless an exemption is available.
VA does not establish a universal minimum credit score. Individual mortgage lenders may establish minimum credit scores, underwriting requirements and other credit standards.
The VA home-loan guaranty may be reusable. The amount of remaining or restored entitlement available depends on the borrower's individual VA loan history and applicable VA requirements.
VA-backed mortgages are assumable subject to applicable approval and borrower qualification requirements. A loan assumption does not automatically restore the original Veteran's entitlement. Substitution of entitlement has separate VA requirements.
VA-backed mortgages do not impose a VA prepayment penalty for making additional principal payments or paying the mortgage off early. Borrowers should follow their mortgage servicer's instructions for applying additional principal.
A standard qualifying IRRRL generally does not require a new VA appraisal or traditional full credit-underwriting package. Applicable exceptions and individual lender requirements may apply.
Each refinance must independently satisfy applicable VA seasoning, Net Tangible Benefit, recoupment, payment-history, underwriting and lender requirements.
Refinancing may change the timing of mortgage payments, but mortgage payments and accrued interest are not free or forgiven.
An escrow refund represents applicable borrower funds remaining in an existing escrow account after payoff and reconciliation. It is not equity cash or refinance proceeds.
Interest rates, APRs, discount points, lender credits, mortgage payments, closing costs and mortgage terms vary with market conditions, borrower circumstances, property information, program requirements and lender pricing.
Nothing on this page is a commitment to lend or a guarantee of eligibility, entitlement, qualification, approval, no-down-payment financing, refinance eligibility, assumption, interest rate, payment, mortgage terms or closing.
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