Entitlement, Funding Fee, and Winning Terms
How VA benefits help homebuyers compete with confidence.
Key Takeaways
- Eligible veterans, service members, and certain surviving spouses can buy with no down payment and no PMI.
- Your VA loan benefit (entitlement) shows how much the VA will back your loan.
- The VA funding fee supports the program and may be waived for some borrowers.
- VA loans close as quickly as conventional loans with flexible credit rules.
- VA appraisals protect both buyers and sellers through safety and value standards.
Why VA Loans Are a Real Advantage
Modern VA loans can match or beat conventional loans—offering no down payment, no PMI, and fair credit guidelines that make homeownership more accessible. The VA guarantee protects the lender, allowing better terms and rates. A fully-vetted pre-approval shows sellers that your financing is strong and ready to close.
Understanding VA Entitlement
Your entitlement is the amount the Department of Veterans Affairs promises to repay to your lender if you can’t make payments. This allows eligible borrowers to buy with no down payment or PMI.
- Full entitlement: No VA loan limit when your full benefit is available. The VA guarantees up to 25% of the loan if you qualify by income and credit.
- Partial entitlement: If another VA loan is active, remaining entitlement determines how much the VA can guarantee. County loan limits may affect down payment needs.
- Example: Buying a $1.5M home in a county with an $806,500 limit could require about 25% of the difference as a down payment if your benefit isn’t fully restored.
How the VA Funding Fee Works
The VA funding fee is a one-time charge that replaces monthly mortgage insurance. It can be paid at closing or added to the loan. The percentage depends on service history, down payment, and whether you’ve used your benefit before. As of April 7 2023, first-time use fees range from 1.25% to 2.15% with zero down. Many veterans with service-connected disabilities and some surviving spouses don’t pay it.
VA – Funding Fee Table
Winning Terms in Competitive Markets
VA buyers can compete—and win—by showing sellers that their financing is strong. A verified fully-vetted pre-approval provides clarity and confidence to both buyer and seller. When ordered early, VA appraisals move quickly and confirm fair value and safety.
- Get your Certificate of Eligibility (COE) early.
- Work with a lender familiar with VA appraisals.
- Request a fully-vetted pre-approval sheet showing payment and closing details.
- Ask about rate buydowns and seller credits allowed by VA rules.
The Bottom Line
- No money down, no PMI.
- No VA loan limits with full entitlement.
- Funding fees 1.25–3.3%, often waived.
- Appraisals protect value and safety, not red tape.
- Fully-vetted pre-approvals make your offer stronger.
FAQs
Do I need perfect credit for a VA loan?
No. Most lenders look for a score around 620, but steady income and good payment habits are just as important.
Can I have two VA loans at once?
Sometimes. You can use remaining entitlement if one home stays your main residence.
Is the funding fee always required?
No. Veterans with service-connected disabilities and qualifying surviving spouses are exempt.
Are VA appraisals slower?
No. When ordered early, they move as fast as other types of appraisals.
Can sellers pay my closing costs?
Yes. Sellers can pay up to 4% toward concessions plus standard closing costs.
Next Steps