VA Loans: Zero Down, No PMI, and the Funding Fee Nobody Explains

Eligibility and the Certificate of Eligibility

Eligibility depends on service era and duration — generally 90 continuous days during wartime, 181 days during peacetime, or six years in the National Guard or Reserves. Surviving spouses of service members who died in the line of duty or from a service-connected disability may also qualify.

Your Certificate of Eligibility is the document that proves it. Most lenders can pull it electronically in minutes. Get it before you shop, because it also establishes how much entitlement you have available, which determines whether you can buy with zero down.

No PMI, but there is a funding fee

The VA loan's structural advantage is the absence of monthly mortgage insurance despite zero down payment. Nothing else in the market does that. In exchange, borrowers pay a one-time funding fee that varies by down payment amount and whether this is a first or subsequent use — first-time use with nothing down sits at the top of the schedule, and larger down payments reduce it.

The fee is typically financed into the loan. Borrowers receiving VA disability compensation, and certain surviving spouses, are exempt entirely. If you have a rating and were charged the fee, you can request a refund — this happens more often than it should.

Entitlement, reuse, and second homes

Entitlement is the dollar amount the VA guarantees on your behalf. It is restored when you sell and pay off a VA loan, meaning the benefit is reusable indefinitely. You can also have two VA loans simultaneously using remaining entitlement, which is how service members handle a PCS move without selling.

There is no VA loan limit for borrowers with full entitlement, though lenders set their own caps. With partial entitlement, county limits still govern how much can be borrowed with nothing down.

The appraisal is stricter than you expect

VA appraisals produce a Notice of Value and enforce Minimum Property Requirements covering safe access, working mechanicals, adequate roofing, no exposed wiring, and no obvious health hazards. Well and septic systems draw particular scrutiny.

There is also the escape clause: if the appraised value comes in below contract price, the buyer may walk and recover the earnest money regardless of other contract terms. That protection is federally mandated and cannot be waived.

Frequently asked questions