Short answer. A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs for eligible veterans, active-duty service members, and surviving spouses. VA loans require 0% down, no PMI, and accept FICO scores as low as 580.
VA loans were created by the Servicemen's Readjustment Act of 1944 (the GI Bill) to help returning World War II veterans purchase homes. The program has continued and expanded over 80 years.
VA loan eligibility
- Active-duty service members (90+ days during wartime, 181+ days peacetime)
- Veterans with honorable discharge
- National Guard and Reserve members (with 6+ years of service)
- Surviving spouses of service members who died in service or from service-connected disability
Key terms
- Down payment: 0% (the only major no-down-payment program in U.S. mortgage finance)
- PMI: Not required; replaced by a one-time VA Funding Fee (typically 1.4-3.6% of the loan)
- Credit score: No federal minimum; lenders typically require 580+
- Loan limit: No federal cap; lenders typically follow conforming limits ($806,500 in 2025 standard areas)
- Property: Owner-occupied primary residence only
The VA Funding Fee
VA loans require a one-time funding fee that varies by service category, down-payment level, and whether it's a first or subsequent VA loan. The 2024 funding fees range from 1.4% (regular military, first use, 10%+ down) to 3.6% (subsequent use, 0% down).
VA loan market share
VA loans accounted for approximately 8-10% of U.S. mortgage originations in 2024 — a meaningful share given that veterans are a relatively small share of total U.S. households. The VA loan's no-down-payment feature makes it the dominant first-time-buyer product for eligible veterans.
Sources
U.S. Census Bureau Survey of Construction; National Association of Realtors Existing Home Sales report; Freddie Mac Primary Mortgage Market Survey; National Bureau of Economic Research Business Cycle Dating Committee.