VA Home Loans: No Down Payment, No PMI, and the Funding Fee

The short version

A VA-backed home loan lets eligible service members, veterans, and some surviving spouses buy a home with no down payment and no monthly mortgage insurance. Those two features are the whole point: they cut both the cash you bring to closing and your monthly payment compared with most conventional loans.

The main cost is a one-time VA funding fee, and many veterans with a service-connected disability pay nothing at all. New for 2026, borrowers who do pay the fee can now deduct it on their taxes.

Why the VA loan is different

A VA loan is still made by a regular bank or lender. What changes the math is the VA guarantee behind it, which is why lenders can offer terms most buyers cannot get.

1. No down payment. In most cases you can finance 100 percent of the purchase price.
2. No monthly mortgage insurance. Conventional buyers with low down payments usually pay PMI every month. VA loans never require it.
3. A private loan, VA-guaranteed. The lender sets your rate; the VA guarantees part of the loan, which lowers the lender risk.
4. One funding fee. A single fee stands in for ongoing mortgage insurance, and you can roll it into the loan.

No down payment and no PMI are where the VA loan earns its keep, they lower both the cash you need at closing and what you pay every month.

Source: VA

First, get your Certificate of Eligibility

Eligibility is based on your service, active duty, Guard, Reserve, veterans, and some surviving spouses can qualify. You prove it with a Certificate of Eligibility (COE), which you can request online through VA.gov, through many lenders, or by mail. Get your COE early; it tells you and your lender that you qualify before you start house-hunting.

The VA funding fee, and who skips it

The funding fee is a one-time payment that keeps the program running without down payments or monthly insurance. It is a percentage of your loan amount, not the purchase price, and you can pay it at closing or finance it. For a first-time purchase loan at the rates in effect for 2026, the fee is 2.15% with less than 5% down, dropping to 1.5% at 5% down and 1.25% at 10% or more. A later, subsequent-use purchase loan is 3.3% with less than 5% down.

A worked example, from the VA

• The home. A $200,000 purchase, first-time VA use
• Down payment. $10,000 (5%), so you borrow $190,000
• Funding fee. 1.5% of $190,000 = $2,850
• If you are exempt. Many disabled veterans pay $0

You do not pay the funding fee at all if you receive (or are eligible to receive) VA disability compensation, if you are a surviving spouse receiving DIC, or if you are an active-duty Purple Heart recipient.

Source: VA

New for 2026: the funding fee is tax-deductible

Starting this year, veterans, service members, and surviving spouses who pay the VA funding fee on a home purchase can deduct it on their taxes, under legislation that took effect in 2026. The VA itself flags this as informational, not tax advice, so confirm how it applies to your return with a tax professional or MilTax before you count on it.

What about the other closing costs?

The funding fee is the one cost you can roll into a purchase loan, the rest of your closing costs you pay at closing. Your lender sets your interest rate, discount points, and origination charges, so they vary from lender to lender. The VA does cap what a seller can contribute: seller concessions are limited to 4 percent of the home reasonable value, though buyers and sellers can still negotiate who pays standard closing costs. Read the Loan Estimate your lender gives you line by line.

Do this now

1. Request your COE on VA.gov so you know you qualify before you shop.
2. Check your funding-fee status. If you get or are eligible for VA disability compensation, confirm your exemption.
3. Compare at least two or three lenders. The VA does not set your rate, lenders do.
4. Budget for closing costs you cannot finance, and ask the seller about concessions.

Where to get help

VA regional loan centers can answer eligibility and funding-fee questions, including refunds if you are later awarded disability compensation. Start at the VA.gov home loans pages, and use your installation personal financial counselor or Military OneSource for free help thinking through whether buying fits your plans. Links are below.

FAQ

Do I really need zero down?

In most cases you can buy with no down payment. Putting some money down lowers your funding fee and your loan balance, but it is not required.

Is there monthly mortgage insurance?

No. VA loans never require PMI, which is one of the biggest monthly savings versus a low-down-payment conventional loan.

Do I have to pay the funding fee?

Not if you receive or are eligible for VA disability compensation, you are a surviving spouse receiving DIC, or you are an active-duty Purple Heart recipient.

Can I use a VA loan more than once?

Yes. The benefit can be reused, though the funding fee is higher for subsequent use unless you are exempt.

Sources & links

• VA, VA-backed home loans: va.gov
• VA, Eligibility: va.gov
• VA, How to request a COE: va.gov
• VA, Funding fee and closing costs: va.gov
• VA News, Home loan borrowers can now deduct funding fees: news.va.gov