VA Home Loan Explained: 2026 Funding Fee, Eligibility, Limits and How to Apply

A VA home loan is a mortgage from a private lender that the Department of Veterans Affairs partly guarantees. That guarantee lets lenders offer eligible veterans, service members and some surviving spouses a loan with no down payment and no monthly mortgage insurance. Most borrowers pay a one-time funding fee of 1.25% to 3.3% of the loan instead, and veterans with a service-connected disability rating pay no fee at all. According to VA.gov, nearly 90% of VA-backed loans are made with no down payment.

This guide sets out the current rules, fees and limits as published by VA and the Federal Housing Finance Agency, checked on 9 October 2026.

How the guaranty works

VA does not usually lend the money. You borrow from a bank, credit union or mortgage company, and VA guarantees part of the loan. Because the lender carries less risk, it can accept a smaller or zero down payment. The lender still sets the interest rate, discount points and most closing costs, and it still checks your credit, income and debts. VA also lends directly through one scheme, the Native American Direct Loan (NADL).

The benefit covers four main loan types: a purchase loan, the NADL, the Interest Rate Reduction Refinance Loan (IRRRL) and the cash-out refinance loan.

Who is eligible

Eligibility depends on when and how you served. The VA eligibility page lists eleven service eras. The rows most readers need are below.

Shorter service can still qualify if you were discharged for a service-connected disability, hardship, a reduction in force or certain medical conditions. If your discharge was other than honourable, VA points you to a discharge upgrade or a Character of Discharge review.

The VA funding fee in 2026

The funding fee replaces mortgage insurance and helps keep the scheme running. It is a percentage of the loan amount and can be rolled into the loan. The rates below have applied since 7 April 2023 and were unchanged on the VA funding fee page in October 2026.

Worked example: on a $300,000 purchase with no down payment, first use, the fee is 2.15%, or $6,450. Put 10% down and the fee on the $270,000 loan falls to 1.25%, or $3,375.

Who pays no funding fee

You are exempt if any of these apply:

• You receive VA compensation for a service-connected disability.
• You are eligible for that compensation but receive retirement or active-duty pay instead.
• You are a surviving spouse receiving DIC.
• You are a service member with a proposed or memorandum rating, issued before closing, that finds you eligible for compensation based on a pre-discharge claim.
• You are on active duty and show evidence, on or before closing, that you received the Purple Heart.

If VA later awards you compensation with an effective date before your closing date, you may be due a refund of the fee. A rating issued after closing does not qualify. Contact your VA regional loan centre to ask.

Loan limits and entitlement

If you have full entitlement, VA sets no loan limit. You can borrow as much as a lender will approve and the appraisal supports, with no down payment.

If part of your entitlement is still tied up in an earlier VA loan, a limit applies. Your remaining entitlement equals 25% of your county's one-unit conforming loan limit, minus the entitlement already charged on your Certificate of Eligibility. Lenders usually want your entitlement plus any down payment to cover at least 25% of the loan. VA uses the FHFA county limits. For 2026, the FHFA set the baseline one-unit limit at $832,750 and the high-cost ceiling at $1,249,125.

VA's own example: in a county with a $900,000 limit, 25% is $225,000. With $50,000 of entitlement already used, $175,000 remains, which supports a loan of about $700,000 with no down payment. The VA loan limits page explains the calculation.

Closing costs and seller concessions

On a purchase loan you can finance only the funding fee. You pay other closing costs at closing, or the seller pays them. Agent commissions, origination charges, the VA appraisal fee, title insurance and recording fees are all open to negotiation between buyer and seller. There is no cap on seller credits toward ordinary closing costs, but seller concessions, such as paying your funding fee or clearing your debts, cannot exceed 4% of the home's reasonable value on the VA Notice of Value.

How to apply, step by step

1. Get your documents. Veterans need a DD214. Serving members need a signed statement of service from their commander, adjutant or personnel officer. Guard and Reserve members need points statements or NGB Forms 22 and 23 if never activated.
2. Request a Certificate of Eligibility (COE). Apply online at VA.gov, ask your lender to request it through VA's system, or post VA Form 26-1880 to your regional loan centre.
3. Choose a lender. Compare Loan Estimates from at least two VA-approved lenders, since rates and fees vary.
4. Make an offer and order the VA appraisal. The lender orders it. It sets the reasonable value of the property and is separate from a home inspection.
5. Underwriting and closing. The lender reviews the appraisal, your credit and income, then you close through a title company or attorney.

Full document lists for each status are on the VA how-to-apply page.

Refinancing with a VA loan

The IRRRL lets you refinance an existing VA loan to a lower rate for a 0.5% fee. The cash-out refinance lets you refinance into a VA-backed loan and take equity out as cash, at the purchase-loan fee rates of 2.15% or 3.3%.

If you fall behind on payments

The VA Home Loan Reform Act, signed on 30 July 2025, created a VA Partial Claim Program, which VA formally launched in June 2026. As The American Legion reported, servicers identify veterans in default, a qualifying veteran completes a three-month trial payment plan, and the servicer then brings the loan current. VA reimburses the servicer, and the amount is repaid when the loan is paid off, refinanced or the home is sold. If you are behind, contact your servicer first and ask whether you qualify.

Grants for adapted housing

Veterans with certain service-connected disabilities can also apply for grants to buy, build or adapt a home. These sit alongside the loan and have their own eligibility rules. Maximum amounts for fiscal year 2026, from the VA disability housing grants page:

Who to contact

VA home loan line: (877) 827-3702, Monday to Friday, 8am to 6pm Eastern time, listed on the VA home loans contact page. Native American Direct Loan enquiries: (888) 349-7541. TTY users dial 711. For veterans living in the UK, the UK housing support guide covers schemes on this side of the Atlantic, and the Covenant and VA benefits comparison sets out how the wider systems differ.