VA loans are arguably the best mortgage product available because they require zero down payment, have no monthly mortgage insurance, and offer competitive interest rates. The VA does not lend money directly—private lenders originate VA loans and the VA guarantees a portion of the loan. VA loans require a funding fee (ranging from 1.25% to 3.3% depending on down payment and prior use) which can be financed into the loan. Disabled veterans may be exempt from the funding fee. VA loans require a Certificate of Eligibility (COE).
A veteran with 20 years of service purchases a $400,000 home using a VA loan with zero down payment and no PMI. The VA funding fee of 2.15% ($8,600) is financed into the loan. The veteran's monthly payment includes only principal, interest, taxes, and insurance—no mortgage insurance premium.
Key VA exam facts: NO down payment required, NO monthly mortgage insurance, funding fee required (but disabled vets may be exempt), the VA guarantees but does NOT lend, and only eligible veterans/active military/surviving spouses qualify. A Certificate of Eligibility (COE) is required.
Related Terms
Related Concepts
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
Frequently Asked Questions
Related Blog Posts
Novation explained for real estate exams: a new contract replaces an old one, and the original party is released. Learn the "trade-in" memory hook, exam keywords, and how to avoid confusing novation with assignment or assumption.
Learn the three approaches to value, CMA basics, and cap rate questions with examples and practice.
Learn how Home Value Landing Page works and how U.S. real estate agents use it in 2026. Includes setup steps, practical examples, and best-practice tips.
Study This in Your State
VA Loan may have state-specific rules. Choose your state to study Financing with localized content: