VA Home Loans Explained: Eligibility, Funding Fee and Reuse

VA Benefits · Updated October 2026 · 15 min read

This guide is for veterans, service members, National Guard and Reserve members, and surviving spouses who want to buy, build or refinance a home with a VA-backed loan, including people who have used the benefit before. It explains what the VA guaranty does and does not do, who can get a Certificate of Eligibility, how entitlement and loan limits work, what the funding fee costs and who is exempt, the occupancy and appraisal rules, and where to get help if payments become hard.

What a VA-backed loan is, and what it is not

A VA home loan usually is not a loan from VA. You borrow from a private bank, mortgage company or credit union, and VA guarantees part of the loan: if you don't repay, VA pays the lender a percentage of it. That lowers the lender's risk, which is why VA borrowers can often buy with no down payment and get better terms.

The lender still makes the key decisions: it sets your interest rate, discount points and closing costs, and it reviews your credit, income, debts and assets. Terms vary, so compare more than one lender.

What the benefit gives you: no down payment required by VA (a lender may still ask for one), no private mortgage insurance, limits on closing costs, and a guaranty you can use more than once in your lifetime. The home must be one you will live in, and it can have up to four units. Your options include:

• Purchase loan: buy, build or improve a home you will live in, including a condo in a VA-approved project.
• Interest rate reduction refinance loan (IRRRL): refinance a VA loan to a lower rate, or from an adjustable to a fixed rate.
• Cash-out refinance: refinance any mortgage or lien on the home you live in, VA or not, and take cash from your equity.
• Native American Direct Loan (NADL): VA itself lends to Native American veterans and to veterans married to a Native American, with a 30-year fixed-rate mortgage, for a home on federal trust land where the tribal government has an agreement with VA. NADL coordinators: 888-349-7541.
• Energy-efficient improvements: up to $6,000 of improvements can be added to a purchase loan, and energy upgrades can be paired with a VA refinance.
• Adapted housing grants: Specially Adapted Housing (SAH) and Special Housing Adaptation (SHA) grants help veterans with certain permanent and total service-connected disabilities; fiscal year 2026 maximums were $126,526 (SAH) and $25,349 (SHA). VA sets new amounts for each fiscal year starting October 1, and the fiscal year 2027 amounts had not been published when this guide was updated.

Who can get a Certificate of Eligibility

The Certificate of Eligibility (COE) shows a lender that your service qualifies you. It does not approve a loan; you still have to meet VA's and the lender's credit, income and occupancy requirements.

Service members qualify after 90 continuous days of active duty. Veterans who served on or after August 2, 1990, generally need 24 continuous months, the full period they were called or ordered to active duty (at least 90 days), or at least 90 days if discharged early for a qualifying reason such as hardship or a reduction in force. A service-connected disability discharge qualifies with less time. Earlier periods generally need 90 days in wartime (World War II, Korea, Vietnam) or 181 days in peacetime, and service from September 8, 1980 (October 17, 1981, for officers), to August 1, 1990, generally needs 24 continuous months or the full period called (at least 181 days).

An other than honorable, bad conduct or dishonorable discharge may make you ineligible, but you can still apply and VA will review your record. You can also seek a discharge upgrade or a VA Character of Discharge review (see our guide Discharge Upgrades and Record Corrections).

A surviving spouse may qualify if the veteran died in service or from a service-connected disability and the spouse has not remarried, or remarried on or after age 57 and on or after December 16, 2003. Some spouses of totally disabled veterans qualify even if the disability didn't cause the death, and spouses of service members listed as missing in action or prisoners of war for at least 90 days can qualify for one loan.

Since January 5, 2021, full-time National Guard duty under Title 32 counts: at least 90 days, including 30 consecutive days, under 32 U.S.C. section 316, 502, 503, 504 or 505. Monthly drills and basic or initial training don't count toward those days, and the change covers past service, so Guard members who were turned down before can reapply. The Guard and Reserve routes are:

• Guard: at least 90 days of non-training active duty under Title 10.
• Guard: 6 creditable years, and you are still serving, were discharged honorably or were placed on the retired list.
• Reserve: at least 90 days of non-training active duty, or 6 creditable years in the Selected Reserve on the same terms.
• Guard, Title 32: the full-time duty route described above.

How to request your COE

There are three ways: request it online on VA.gov, ask your lender to get it, or mail VA Form 26-1880, Request for a Certificate of Eligibility, to your regional loan center (the address is on the form's last page). Lenders use VA's Web LGY system, which in many cases produces a COE in seconds. Mail can take longer. You can check your request's status online.

Surviving spouses who receive Dependency and Indemnity Compensation (DIC) file VA Form 26-1817 with the veteran's DD214 if available, through the lender or by mail. If you don't receive DIC, file VA Form 21P-534EZ, the application for DIC, survivors pension and accrued benefits, with your marriage license and the veteran's death certificate. It goes to VA's Pension Intake Center in Janesville, Wisconsin.

If you have used the benefit before, request a COE the same way. It lists the entitlement already charged to prior loans, and you can ask VA to restore entitlement in the same request.

Before you apply, gather the documents for your situation:

• Veterans: a copy of your DD214.
• Active duty: a statement of service signed by your commander, adjutant or personnel officer showing your full name, Social Security number, date of birth, entry date, any lost time and the command.
• Activated Guard or Reserve: your DD214 or other discharge papers. For Title 32 service, a DD214 showing that activation, an annual point statement, or a DD220 with orders.
• Guard or Reserve, never activated and still serving: a signed statement of service that also lists your creditable years.
• Discharged and never activated: Guard members need NGB Form 22 for each period, NGB Form 23 and proof of character of service; Reserve members need their latest annual retirement points and proof of honorable service.

Entitlement, loan limits and using the benefit again

Entitlement is the amount VA will guarantee for you. A COE showing basic entitlement of $36,000 means you have full entitlement. That is not a borrowing cap: on loans over $144,000, VA guarantees up to 25% of the loan through bonus entitlement, which the COE doesn't show.

With full entitlement, VA sets no loan limit. Your lender decides what you can afford, and the loan can't exceed the lower of the price or the appraised value, plus the funding fee if you finance it.

You can hold two VA loans at once if you have enough remaining entitlement: keep the first home, buy the next, qualify for both payments, and live in the new home. VA can restore used entitlement when you sell and pay off the loan, when a qualified veteran assumes your loan and substitutes their entitlement, or one time only when you pay off the loan but keep the home; after that, a later restoration requires that you no longer own any home bought with a VA loan. After a foreclosure, short sale or deed in lieu, VA's loss must be repaid first.

A buyer, veteran or not, can assume your VA loan and its rate if the servicer approves them, paying a 0.5% funding fee unless exempt. Unless the buyer is a veteran who substitutes their entitlement, yours stays tied to that loan, and a default by the buyer counts against it.

If some entitlement is still tied to a VA loan that hasn't been paid off and restored, county limits apply, using the Federal Housing Finance Agency's one-unit conforming loan limit for the county. In VA's example, a $900,000 limit times 25% is $225,000; minus $50,000 already used, $175,000 remains. Most lenders lend up to four times that, $700,000 here, with no down payment; beyond that, lenders generally want entitlement and down payment together to cover 25% of the loan. To work out your own figure:

• Find the entitlement already used in the Entitlement Charged column of your COE.
• Look up the county's one-unit conforming loan limit on the FHFA website, even if the home has more than one unit.
• Multiply that limit by 0.25.
• Subtract the entitlement already used. The result is your remaining entitlement.

The VA funding fee: rates, exemptions and refunds

The funding fee is a one-time charge that offsets the cost to taxpayers of a program with no down payment requirement and no monthly mortgage insurance. It is a percentage of the loan amount, not the price, and you can pay it at closing or add it to the loan.

You don't pay the fee if you receive VA compensation for a service-connected disability; are eligible for it but receive retirement or active-duty pay instead; are a surviving spouse receiving DIC; are a service member with a proposed or memorandum rating, issued before closing, based on a pre-discharge claim; or are on active duty and provide evidence of a Purple Heart on or before closing. If VA later awards compensation effective before your closing date, you may get a refund; call 877-827-3702. A proposed or memorandum rating received after closing doesn't qualify for a refund.

Once you have had a VA-backed or VA direct loan, later purchase and cash-out loans generally carry the after-first-use rate, even if your entitlement was restored. Two exceptions keep the first-use rate: your only past use bought a manufactured home, or your next loan, made within three years of the damage, only repairs or rebuilds a VA-financed home that a presidentially declared major disaster substantially damaged or destroyed.

VA's example: a first-time user buys a $200,000 home with $10,000 down (5%). The loan is $190,000, and the fee is 1.5% of that, or $2,850.

The rates below have applied since April 7, 2023, and federal law keeps them for loans closed before June 9, 2034, a date Congress has moved several times. Guard and Reserve members pay the same rates as everyone else.

• Purchase or construction, first use: 2.15% with less than 5% down, 1.5% with 5% to under 10% down, 1.25% with 10% or more down.
• Purchase or construction, after first use: 3.3% with less than 5% down, 1.5% with 5% to under 10% down, 1.25% with 10% or more down.
• Cash-out refinance: 2.15% first use, 3.3% after first use.
• IRRRL: 0.5%. Loan assumption: 0.5%.
• Native American Direct Loan: 1.25% to purchase, 0.5% to refinance.
• Manufactured home not permanently affixed: 1%.

Closing costs, seller help and fees you can't be charged

VA limits what you can be charged. You may pay reasonable itemized costs such as the VA appraisal, credit report, title work, recording fees, prepaid taxes and hazard insurance, plus reasonable discount points and a lender flat fee of no more than 1% of the loan. Lenders often call the 1% an origination fee, and it is sometimes negotiable.

On a purchase loan, the funding fee is the only closing cost you can finance. The seller can pay your closing costs with no VA limit, but seller concessions are capped at 4% of the home's reasonable value on the VA Notice of Value. Concessions include the seller paying your funding fee, paying off your debts or prepaying your hazard insurance; normal discount points and closing costs don't count toward the 4%.

VA's regulation generally bars veterans from paying real estate brokerage charges. Since August 10, 2024, a temporary VA exception lets you pay reasonable fees to your own buyer's agent where the listing broker can no longer set or pass along that pay. The fee can't go into the loan, the lender counts it when checking your cash to close, and the seller may still pay it without that counting as a concession.

Compare Loan Estimates, and read the Closing Disclosure, which must reach you at least 3 business days before closing. Budget for property taxes too: many states offer property tax reductions to certain veterans, and the rules vary by state, so ask your state veterans affairs office.

The lender's 1% flat fee has to cover its other costs, so a lender can't bill you separately for these:

• Closing or settlement fees and document preparation
• Loan application or processing fees
• Interest rate lock-in fees
• Escrow, notary and tax service fees
• Attorney fees charged by the lender, other than for title work
• Fees of loan brokers or other third parties

Occupancy, the VA appraisal and property standards

A VA loan must be for a home you live in; you certify at closing that you will occupy it. VA's lender guidance treats a reasonable time as within 60 days of closing. A later move-in can work if you certify a specific date tied to a specific future event, but occupancy more than 12 months after closing generally isn't accepted. Investment property and vacation homes don't qualify.

If you're on active duty and can't move in, your spouse's occupancy satisfies the rule, as does a dependent child's, certified by your attorney-in-fact or the child's legal guardian. Deployed service members still meet the requirement. For an IRRRL you only certify that you lived there before, so a veteran who moved and rented the home out can still refinance it.

Your lender orders a VA appraisal. A VA-approved appraiser estimates market value and checks the home against VA's minimum property requirements (MPRs), the basic condition standards a home must meet, and you get the result in a Notice of Value. An appraisal is not a home inspection or a guaranty of value, and VA strongly recommends a separate inspection.

Make sure your purchase contract includes the VA escape clause, also called the VA option clause. It gives you the option to void the contract if the home doesn't appraise for the contract price. If the value comes in low, you can ask for a Reconsideration of Value with sales data that support a higher value, renegotiate the price, or pay the difference at closing.

Refinancing with an IRRRL or cash-out loan

An IRRRL, often called a streamline refinance, replaces a VA loan with a new one at a lower rate, or moves a VA adjustable-rate loan to a fixed rate, which can mean a higher rate. You get no cash. VA does not require an appraisal or credit underwriting, closing costs can be included in the new loan, and the funding fee is 0.5%.

Federal law adds guardrails. The loan being refinanced must have six consecutive monthly payments made and be at least 210 days past its first payment due date. Fees and closing costs must be recouped through lower payments within 36 months, and a fixed-to-fixed refinance must cut the rate by at least 0.5 percentage point (at least 2 percentage points when a fixed rate becomes adjustable).

A cash-out refinance can replace any mortgage on the home you live in, VA or not, and can put cash in your hand. The new loan, including the funding fee, can't exceed 100% of the reasonable value VA sets. The lender must show a net tangible benefit, give you a comparison of the old and new loans within 3 business days of applying and again at closing, and estimate the home equity you are taking out. The funding fee is 2.15% on first use and 3.3% after.

Be wary of unsolicited offers. In 2017, VA and the Consumer Financial Protection Bureau issued a joint Warning Order on VA refinance pitches that promise extremely low rates, thousands in cash back, skipped mortgage payments, no out-of-pocket costs or no waiting period. VA prohibits lenders from advertising skipped payments as a way to get cash from an IRRRL, and costs billed as free are generally added to your loan balance. Be especially careful if someone pushes you to refinance a month or two after you closed, and report problems to the CFPB at 855-411-2372.

If you fall behind on payments

Call your servicer as soon as trouble starts. VA loan technicians can help too: call 877-827-3702 and select 6 (TTY: 711), Monday through Friday, 8:00 a.m. to 6:00 p.m. ET. VA counsels veterans and surviving spouses even when the loan isn't VA-guaranteed, and it assigns a technician automatically once a VA-guaranteed loan is 61 days past due.

VA lists these options: special forbearance, a repayment plan, a VA traditional loan modification, a 30-year modification, a 40-year modification and a VA partial claim. If you can't keep the home, ask about extra time for a private sale, a short sale or a deed in lieu of foreclosure; VA warns the last two could mean losing or reducing your future home loan benefit.

VA stopped taking new cases for its Veterans Affairs Servicing Purchase (VASP) program on May 1, 2025, with no VASP payments after September 30, 2025. VA launched its Partial Claim Program on June 15, 2026, under a law signed July 30, 2025. After you complete a 3-month trial payment plan, VA works with your servicer to pay your missed payments and bring the loan current, and you repay it when you pay off the loan or sell the home. Servicers have until November 28, 2026, to add partial claims to their systems, so ask yours where it stands.

If a VA-guaranteed loan that closed on or after January 1, 1990, ends in foreclosure, you owe VA its loss only if VA finds fraud, misrepresentation or bad faith, but you must repay that loss to restore the entitlement. A partial claim works differently: under federal law, if you default on one, you are liable for any loss VA suffers, and VA won't restore your entitlement until that loss is repaid in full. If you are homeless or at risk, the National Call Center for Homeless Veterans is open 24/7 at 877-424-3838.

Foreclosure rescue scams target people in this spot. CFPB warning signs include up-front fees, advice to stop paying your mortgage, requests to pay someone other than your servicer, pressure to sign over your title, and talk of a 'forensic audit.' Turn instead to VA's loan technicians, a HUD-approved housing counselor (no cost to you), a County Veterans Service Officer, or an accredited Veterans Service Organization representative, whose help on VA claims is always free. Check anyone claiming VA accreditation with VA's Office of General Counsel accreditation search.

Sources

Every figure above is drawn from these sources. Figures and rules change, so check the current source before you act.

• VA.gov: Eligibility for VA home loan programs
• VA.gov: How to request a VA home loan Certificate of Eligibility (COE)
• VA.gov: VA home loan entitlement and limits
• VA.gov: VA funding fee and loan closing costs
• VA.gov: Buying a home with a VA-backed loan
• VA.gov: Native American Direct Loan
• VA.gov: Home loans for surviving spouses
• VA.gov: VA help to avoid foreclosure
• VA.gov: Get help from a VA accredited representative or VSO
• VA Benefits: VA Home Loans (Loan Guaranty Service home page)
• VA Home Loan Buyer's Guide (PDF)
• VA Lender's Handbook (VA Pamphlet 26-7), Chapter 2: Veteran's Eligibility and Entitlement
• VA Lender's Handbook (VA Pamphlet 26-7), Chapter 3: The VA Loan and Guaranty
• VA Lender's Handbook (VA Pamphlet 26-7), Chapter 8: Borrower Fees and Charges and the VA Funding Fee
• VA Circular 26-21-08: Expanded Home Loan Eligibility Based on Certain National Guard Service
• VA Circular 26-24-14: Temporary Local Variance for Certain Buyer-Broker Charges
• VA Circular 26-25-2: Veterans Affairs Servicing Purchase (VASP) Program Wind Down
• VA News: VA launches Partial Claim Program to help Veterans avoid home foreclosure (June 15, 2026)
• Pub. L. 119-37, Continuing Appropriations and Extensions Act, 2026, sec. 7307 (govinfo.gov)
• Federal Register: Specially Adapted Housing Cost-of-Construction Index for Fiscal Year 2026 (90 FR 51820, Nov. 18, 2025)
• 38 U.S.C. 3729, Loan fee (U.S. Code, 2024 edition, govinfo.gov)
• 38 U.S.C. 3709, Refinancing of housing loans (U.S. Code, 2024 edition, govinfo.gov)
• 38 CFR 36.4306, Refinancing of mortgage or other lien indebtedness (eCFR)
• CFPB (archived blog, Nov. 20, 2017): CFPB and VA WARNO: VA refinancing offers that sound too good to be true
• CFPB: How to spot and avoid foreclosure relief scams