For millions of veterans and active-duty service members, the VA loan remains one of the few mortgage products that doesn't demand a down payment or private mortgage insurance.
What has shifted is the cost of using it.
The Department of Veterans Affairs charges a funding fee on most VA-backed loans, and that fee is a percentage of the loan amount.
As of 2025, first-time users with no down payment typically pay 2.15%, while those putting down at least 10% pay 1.25%.
The fee is waived entirely for veterans with a service-connected disability rating, as well as for surviving spouses in certain cases.
On a $400,000 home with nothing down, that 2.15% funding fee adds roughly $8,600 to the loan.
You can pay it in cash at closing or roll it into the mortgage, but rolling it in means you're paying interest on it for 30 years.
That's the trade-off many buyers miss when they compare VA loans to conventional ones.
VA loan rates often run slightly below conventional rates because the government guarantees part of the loan, reducing lender risk.
But rates move with the broader market, and the Federal Reserve's decisions on short-term borrowing costs ripple through mortgage pricing within days.
A quarter-point difference on a $400,000 loan is about $60 a month, which adds up fast over three decades.
Renters eyeing a first home purchase should also know the VA loan requires no minimum credit score by law, though most lenders set their own floors, often around 580 to 620.
That's more forgiving than the 620-plus many conventional lenders want.
The catch: a lower score usually means a higher rate.
One more detail that trips people up is the occupancy rule.
You generally have to move into the home within 60 days and live there as your primary residence.
You can't use a VA loan to buy a pure investment property.
Some buyers stretch the rules by purchasing a multi-unit building, living in one unit, and renting the others, which is allowed.
The VA also caps how much you can borrow without a down payment.
In high-cost markets, that ceiling can push buyers toward a jumbo loan, and some lenders offer VA jumbo products.
But once you cross the county limit, expect stricter underwriting and sometimes a down payment requirement.
For those who already have a VA loan, the interest rate reduction refinance loan, or IRRRL, lets you refinance without a new appraisal or credit check in many cases.
It's designed to be fast and cheap, though closing costs still apply.
Watch for lenders advertising "streamline" refis with fees buried in the fine print.
The bottom line for 2025: the zero-down, no-PMI structure still makes VA loans hard to beat for eligible buyers, especially in a market where every dollar of monthly payment counts.
Just run the funding fee math before you fall in love with a listing.
Our take: VA loans remain one of the best mortgage tools available to those who earned them, but the funding fee and today's rates mean the savings aren't automatic.
Final Thoughts
Compare a VA quote against a conventional loan side by side, in writing, before you commit.