If you’ve served your country, the Department of Veterans Affairs (VA) is there to help you get the thanks you deserve. That includes access to a significant perk: VA home loans. 

The VA guarantees a portion of these mortgages. That means they’ll repay some of the money if the borrower fails to make their mortgage payments. That makes VA loans lower-risk for lenders.  

Great, you might be thinking. Sounds nice for them. But because lenders love low-risk loans, they pass some of the benefits onto you. If you need a mortgage and you’re eligible for a VA loan, it comes with some serious upsides.

Here are five benefits of VA home loans that all eligible veterans and service members should know. 

#1: No down payment

First and foremost, the VA lets lenders issue loans with a loan-to-value (LTV) ratio of 100%. That means you can borrow 100% of the money you need to buy your house. As a result, VA home loans are some of the only mortgages that don’t require you to put any money down. 

A 0% down payment means you only need to save up to cover your closing costs. 

That’s particularly helpful for first-time homebuyers. Most homeowners have equity in their house they can use to cover the LTV requirement. But if you’re still spending money on rent, the 0% down payment requirement lets you buy sooner so you can start building equity sooner. 

#2: No mortgage insurance

With conventional loans — or mortgages that aren’t backed by a government agency like the VA — you’re allowed to put less than 20% down. But you’ll literally pay for it. 

Any down payment under the 20% threshold means the loan then requires private mortgage insurance (PMI). This is an added monthly cost, usually to the tune of $100 or more. 

Loans backed by the Federal Housing Administration (FHA) require a different kind of mortgage insurance. These are called mortgage insurance premiums (MIPs), and FHA loan borrowers are subject to both an upfront MIP and ongoing MIPs. That’s true regardless of how much money you put down.  

VA home loans, on the other hand, avoid all of this. You will have to pay the VA funding fee, but that’s a one-time deal, not an added monthly cost. 

#3: Lower interest rates

With the VA’s guarantee, lenders put VA loans in the low-risk category. And that’s great news for you when it comes time for them to decide what interest rate to charge you.

Lenders use interest to make money. If they think you’re pretty likely to repay your loan in full, they’ll charge you a lower interest rate. If you look risky, they might still lend to you, but at a higher interest rate. This way, they can make money while you are making payments.

With the VA to lower the risk level, lenders typically offer lower mortgage interest rates on VA home loans than on other types of mortgages. 

#4: No loan limits

The VA decides how much of your loan it will guarantee based on what it calls your entitlement. If you’ve never used a VA loan before, you have full entitlement. You also have full entitlement if you’ve fully paid off a previous VA loan and sold the house, or used the one-time entitlement restoration. 

If you have full entitlement, you’re not subject to any VA cap as far as how much you can borrow. You can get a pricey house well over the limits set by the FHFA (the ceiling for conforming conventional loans) or HUD (the ceiling for FHA loans). 

The only caveat here is that you have to show you can afford the house. Lenders use their own processes to make sure you’re financially capable of managing your mortgage payments. 

#5: More flexible approval requirements

The VA wants to make sure you can afford your mortgage, but they don’t set many hard-and-fast rules. There’s no minimum credit score requirement from the VA, for example. 

The main benchmark here is what the VA calls residual income. As long as you can pay your mortgage and have enough money left over, you should be able to get approved for the loan. 

All of this said, lenders get to put their own rules on the VA home loans they issue. A lot of lenders like to see a credit score of 620 or above, for example. 

Recap: Comparing the benefits of VA home loans against other mortgages

Getting a mortgage can feel like jumping through hoops — and a lot of them with price tags attached. For veterans and service members, VA home loans can remove some of the hassle and cost. 

Here’s an overarching look at how these kinds of mortgages stack up against other home loans:

If you’re eligible to get a VA loan, it’s probably the best mortgage option for you. We have tools to help you get a better feel for what a VA-backed mortgage would mean for you. This rate table showcases current interest rates from a range of VA lenders. And this mortgage calculator can help you figure out how those rates translate to a monthly mortgage payment.