Since 1944, the U.S. Department of Veterans Affairs has helped service members, veterans and their families become homeowners with the VA loan program. If you are eligible for a VA loan, you could receive several benefits by using this program instead of a conventional mortgage.

Applying for any mortgage can be a complicated process, and VA loans are no different. This guide covers the fundamentals of VA loans and offers recommendations for the top VA lenders so you can find the best choice for your home loan.

Locking in a low mortgage rate today can save you thousands over the life of your loan. Compare your mortgage rate offers with national average trends.

U.S. News conducted an in-depth review of leading mortgage companies that offer VA loans. The analysis was based on each lender’s product offerings, customer service ratings and qualification requirements. U.S. News picked the top finisher in different categories, so readers can find the lender that best fits their needs.

The federal government doesn’t lend money with VA loans, but it does offer a guarantee. You borrow from a private lender, and the government guarantees payment for a portion of your mortgage. If you default on your loan, the government will pay back the lender.

With this guarantee, lenders may offer more favorable terms for VA loans compared with conventional mortgages because they are guaranteed repayment. For example, you may be able to take out a loan with no down payment.

You can use a VA loan to buy a home, make energy-efficient improvements on your home or refinance a mortgage. However, you can only use VA loans to buy your primary residence. This program is not available for vacation or investment properties.

You do not have to be a first-time homebuyer to use a VA loan. You can use this program more than once because it’s a lifetime benefit.

The VA loan program is available to active-duty members of the military, veterans, past and present members of the reserves or the National Guard, and surviving spouses of service members who died in combat. To be eligible, applicants must meet a minimum length of service:

Veterans with a dishonorable discharge are not eligible. Surviving spouses who have remarried are not eligible.

Those who served with other organizations may be eligible to use VA loans:

When you apply for a VA loan, you will need to present a certificate of eligibility, or COE, from the VA to the lender to show you qualify for the program. You can apply for a COE online through the VA. Your lender may also be able to pull up your COE as you apply.

In addition to military service requirements, you must meet the lender’s income, credit score and other requirements to qualify for the mortgage. While the VA has no minimum credit score, lenders do: typically a minimum of 620. The lender will also consider your debt-to-income ratio, which is your monthly debt payments compared with your income. Most lenders prefer a DTI of 43% or lower.

The VA does not set a limit on how much you can borrow, but it does limit how much of the loan it will guarantee. This can determine whether you need to make a down payment. If your loan exceeds the ceiling of the VA guarantee, you may be required to make up the difference with a down payment.

In most counties, you can borrow up to $484,350 guaranteed. In high-cost areas, guarantee limits are generally higher.

VA loans are available with the same terms as conventional mortgages, typically either 15 or 30 years. Loan options depend on the lender.

You can choose from both fixed- and adjustable-rate VA loans. With a fixed-rate loan, your interest rate and monthly payments always stay the same. With an adjustable-rate VA loan, your interest rate and monthly payment could change over time, according to a benchmark rate and the rules for your mortgage.

You can put 0% down. If your loan is within the VA guarantee limits, you can take out a mortgage with no down payment.

Bob Blackhurst, Realtor with BHHS Fox & Roach Real Estate Agents & Associates in Greenville, Delaware, finds this feature extremely helpful, especially for first-time homebuyers. “Someone who just gets out of the military in their early 20s might not have that much money saved up, so they can’t make a down payment. With no down payment VA loans, these veterans can become homeowners right away,” he says.

You don’t have to buy mortgage insurance. Mortgage insurance is required with conventional and Federal Housing Administration mortgages if your down payment is less than 20% of the property value. This insurance pays back the lender if you default on your loan. However, with VA loans, you do not need to buy mortgage insurance. This is a significant savings, as private mortgage insurance can cost between 0.5% to 1% of the original loan amount each year.

You could qualify with fair credit. The VA does not require a minimum credit score for loans, but the lenders offering them typically do. You will need some credit history to take out a VA loan. However, because of the VA guarantee, you may be able to qualify with a lower credit score than you would with a conventional mortgage.

You need a minimum FICO score of 620 to qualify for a conventional mortgage under Fannie Mae rules, but VA lenders typically have minimum FICO score requirements that range from 580 to 620.

If your credit score is too low for a VA loan, you may be able to qualify for an FHA loan. If you make a down payment of at least 10%, you could qualify with a FICO credit score as low as 500. A 3.5% down payment is required if your FICO score is higher than 580.

Sellers can help with closing costs. Closing costs include an application fee, a home inspection fee and a title search fee, and costs average between 2% and 5% of the purchase price. Sellers may be willing to pay some of these expenses if they want a higher sale price or if they have had trouble finding a buyer.

With VA loans, the seller can pay for some of your closing costs: up to 4% of the purchase price. For closing costs with conventional mortgages, the seller can only pay up to 3% of the purchase price if your down payment is less than 10%. However, sellers can pay more if you have a higher down payment.

The VA funding fee can be financed. The VA charges a funding fee to set up your loan, but you can add this fee to your loan principal so you don’t have to pay anything upfront.

Cash is available for energy-efficient upgrades. You can typically borrow up to $6,000 with your VA loan to finance energy-efficient upgrades, such as installing a new furnace or improving insulation.

There are no prepayment penalties. Mortgage lenders can charge a penalty if you pay off a conventional mortgage early. The VA does not allow lenders to charge prepayment penalties. This gives you more flexibility to refinance or pay off your loan early if, say, you have to move suddenly for a new deployment. Also, you can take out an adjustable-rate VA loan with a low initial teaser rate and refinance immediately after the teaser rate ends without worrying about a prepayment penalty.

You can get support from the VA. If you have trouble making your mortgage payments, the VA offers support through its Regional Loan Centers. You can reach a specialist by calling 877-827-3702, and he or she will go over your options to avoid foreclosure.

You’ll pay a VA funding fee. The VA charges a funding fee when you take out a VA loan. It’s an extra charge you would not pay for a conventional mortgage. The fee can be added to your loan, so you can pay it as part of your monthly mortgage payment.

“The funding fee is the primary disadvantage of the VA loan,” says Stephen Janocha, a mortgage loan originator who specializes in VA loans at AnnieMac Home Mortgage. “It’s a steep upfront charge. Someone who can make a down payment may want to use another type of loan to avoid the funding fee.” He also notes that the fee stays the same, regardless of your credit score, which can be an advantage or disadvantage, depending on your credit history.

The amount you’ll owe depends on the size of your down payment
, whether you have taken out a VA loan before, and whether you served on active duty or in the reserves or the National Guard.

Say, you served on active duty; this is your first VA loan, and you will not make a down payment. The VA will charge 2.15% of your loan amount for the funding fee.

The VA will not charge the fee if you are a:

They’re only available for primary residences. You can only use VA loans to buy your primary residence. You can’t use this program to buy a vacation home or an investment property. Other government loans, such as FHA and U.S. Department of Agriculture loans, also have this restriction.

You can’t buy a fixer-upper in major disrepair. You can only use a VA loan to buy properties that are livable and that meet the VA’s minimum property requirements. Unlivable properties will be rejected during inspection.

“If a home needs work before it can be lived in, ask the seller if they’d make the repairs first,” Blackhurst recommends. “Let them know if they don’t make the repairs, you can’t buy their property.”

Janocha says, “When you apply for a VA loan, the process is nearly identical to applying for a conventional mortgage. The only additional hurdle is we need a copy of the applicant’s COE as well as their DD-214, their military discharge form.”

You’ll need to submit your COE to prove you meet the service requirements for a VA loan. If you’re a veteran, you also must submit your DD Form 214, Certificate of Release or Discharge from Active Duty.

When you apply for a home loan, lenders like to see consistency in your work history, and holding the same job for several years can easily demonstrate that. This can be tricky for new veterans. Blackhurst recommends that his clients look for connections between their military work and current job.

“Your current job title might sound completely different from your title in the military, but what were your daily responsibilities?” Blackhurst asks. “Is there any overlap with what you do now? I recommend writing a letter to the lender explaining the connection. Otherwise, they may not see it.”

The lender will schedule an appraisal of the property from a VA-certified appraiser. The appraiser will inspect the property to make sure it meets the VA’s minimum property requirements and is acceptable for a loan. If the property does not meet the requirements, the appraiser will point out what needs to be repaired before you can take out a VA loan. You will need to negotiate repairs with the seller and schedule another inspection with the appraiser after the repairs are completed.

The appraiser will also come up with an opinion on how much the home is worth based on its size, amenities, condition, location and similar properties in the area.

“The appraiser needs VA certification, but they are not an employee of the VA,” Janocha says. “There’s a little bit of a stigma because some sellers worry there are additional steps for a VA appraisal. That’s not true. The property only has to meet the minimum standards … like with any other home loan.”

Many VA lenders are looking for your business. To narrow down your search, consider these five key factors:

Lenders charge different interest rates on their VA loans. By shopping around, you could get a lower rate, which means you’d pay less to borrow money. The difference between lenders can depend on whether you’re looking for a fixed- or an adjustable-rate loan. Your monthly payments stay the same during the entire loan with a fixed-rate VA loan. On an adjustable-rate VA loan, your payments can go up or down over time based on a benchmark rate, such as the Libor index.

For fixed-rate VA loans, lenders charge similar interest rates. However, an interest rate that’s a few tenths of a percentage point lower can translate into hundreds of dollars in savings over the course of your mortgage. Rates may vary more significantly with adjustable-rate VA loans because lenders sometimes offer teaser rates to attract new clients.

Lenders can charge a number of closing costs to set up your loan. According to the VA, common VA loan closing costs include:

When you add these costs, the loan with the lowest interest rate might not be the best deal overall. An APR represents the annual cost of a loan once you factor in all the expenses. You should look at APRs rather than interest rates to get a true apples-to-apples comparison.

Lenders can offer VA loans for different terms, or lengths. The most common are 15- and 30-year mortgages, but other terms may be available, depending on the lender. Some lenders have a variety of VA loan offerings, while others stick to a few key products.

Lenders may also provide fixed- or adjustable-rate VA loans, or both. If a lender offers adjustable-rate VA loans, it could have different options for how often the interest rate can change. For example, on a 5/1 adjustable-rate VA loan, the interest rate stays the same for five years and then can only change once per year. Common adjustable-rate mortgages include 3/1, 5/1, 7/1 and 10/1.

The same military service requirements apply to all VA loans, no matter the lender. However, lenders could have different credit and financial requirements. Most lenders have a minimum FICO credit score to qualify.

Lenders usually have a maximum debt-to-income ratio for borrowers. This is the ratio of your monthly debt payments, including your expected mortgage payment, versus your pretax monthly income. For example, if a lender has a debt-to-income ratio limit of 40%, your monthly debt payments, including the VA loan, can be no more than 40% of your income.

Finally, check how a lender rates in customer satisfaction. Lenders that don’t treat their clients well might not be worth signing up with – even if they offer better mortgage rates.

The 2018 J.D. Power U.S. Primary Mortgage Origination Satisfaction Study is a good place to start. J.D. Power rates lenders based on overall satisfaction. For each category, J.D. Power gives a rating of between 2 and 5, indicating the lender is “among the best.” Also, check with the Better Business Bureau to see whether a lender has any reviews or complaints from borrowers.

Janocha says he believes that customer satisfaction is the most important factor in picking a lender. “Your lender should be someone you trust and feel comfortable doing business with. They also should be easy to contact. Every horror story in this industry seems to come down to a lender who wasn’t accessible during a key part in the process,” he says.

The VA offers several programs, in addition to the standard VA home loan program. If you have a home loan, you may be able to refinance with the VA for a better interest rate or to cash out the equity in your home. Native American and disabled veterans can receive additional benefits; state VA offices provide access to other benefits.

Interest Rate Reduction Refinance Loan

The Interest Rate Reduction Refinance Loan program, also known as a VA Streamline Refinance loan, can refinance your VA loan. With the IRRRL program, you replace your current VA loan with a new one with different terms. This program will not happen automatically, so to take advantage, you need to apply through a lender.

If market interest rates fall, you can apply to this program to refinance to a loan with a lower interest rate and lower monthly payments. VA Streamline Refinance loans can be used to refinance from an adjustable-rate mortgage to a fixed-rate one. However, you cannot refinance from a fixed-rate VA loan to an adjustable-rate VA loan.

You can only use this program to refinance a VA loan, as the program doesn’t allow refinancing for non-VA mortgages. You will need to pay another VA funding fee of 0.5% of the new loan amount to set up your new mortgage. You can include the fee as part of your loan so you don’t have to pay anything upfront.

“The VA’s Streamline Refinance program is easier to qualify for than a standard refinance,” Janocha says. “The lender will not review your credit score, and under most circumstances, you will not need another appraisal of your home.”

VA Cash-Out Refinance Home Loans

With VA cash-out refinance loans, you can borrow against the equity in your home to make renovations, pay off credit cards or buy a new car. The VA will add the amount you cash out to your outstanding home loan.

You can use this program to pay off non-VA mortgages. The VA will pay off your conventional mortgage and issue you a VA loan for the same amount. This could make sense if you qualify for a lower interest rate on a VA loan.

The maximum you can borrow is 100% of the equity in your home. If your home is worth $200,000 and your outstanding VA loan is $100,000, you could take out up to $100,000 in cash for the refinance. However, you can only borrow up to the VA maximum guarantee in your area, which is $424,100 in most counties. If your home is worth more than that, your cash-out refinance can only go up to the guarantee.

You must meet the VA loan service requirements and have a COE to use this program. The VA charges a funding fee for this program as a percentage of the new loan amount.

Native American Direct Loan

Native American veterans who want to live on federal trust land – such as lands in tribal trusts, Alaska Native corporate villages and Pacific island territories – can use the Native American Direct Loan program. If you are eligible, you can use this type of loan to purchase, improve or build a home on federal trust land. You can also use the NADL program to refinance a VA loan.

Loans through the NADL program cap the VA funding fee at 1.25% for mortgages. With regular VA loans, the funding fee can go up to 3.3%. The VA makes NADL loans directly, while regular VA loans come from private lenders. The VA determines the interest rate and closing costs, which could be lower than those of private lenders. However, you can only take out a fixed-rate 30-year mortgage with this program.

To use the NADL program, you must meet the VA service requirements and have a valid COE. The VA will review your credit score and income to see if you meet its standards for a loan. If your monthly debt payments, including the new mortgage payment, exceeds 41% of your monthly income, the VA cannot automatically approve your loan. It will need to look more closely at your financial information to decide if you qualify.

The tribal government managing the area where you’d like to buy a house must sign a formal agreement with the VA outlining how the NADL program will operate. You can check here to see whether your tribal government has signed this document.

Adapted Housing Grants for Disabled Veterans

The VA offers three grants to help veterans with certain disabilities create an adapted home to accommodate disabilities: the Specially Adapted Housing grant, the Special Housing Adaptation grant, and the Home Improvements and Structural Alterations grant.

These grants pay out different amounts and have different eligibility requirements. These are grants, not loans, so you do not have to pay back the money. You could also qualify for multiple grants, so long as you meet the eligibility requirements. You can apply for the HISA grant and either the SAH or SHA grant at the same time.

The SAH grant has a higher cap and is often used to create wheelchair-accessible homes. If you qualify, you can use this money to build or remodel a home to accommodate your disability. You can also use the grant to pay down the mortgage on an adapted home you have already purchased. You can receive up to $77,307 per SAH grant, with a maximum of three grants over your lifetime.

The SAH grant covers serious disabilities from military service, such as the loss of both legs, the loss of both arms, blindness along with the loss of one leg, and certain severe burns. For a complete list, visit the VA’s website.

The SHA grant has a smaller cap and is typically used to improve a veteran’s mobility throughout his or her home. With an SHA grant, you can receive money to adapt a home you own, adapt a home you plan to purchase or buy a home that is already adapted for your disability. You can receive up to $15,462 per SHA grant, with a maximum of three grants over your lifetime.

You could be eligible for an SHA grant if through your military service you have:

If you’re eligible to receive either SAH or SHA grants and are temporarily living in a family member’s home, you can apply for grants to make home improvements to accommodate your disability. You can receive a maximum of $33,937 for the SAH grant or $6,059 for the SHA grant to pay for improvements.

The HISA grant provides funds to renovate your primary residence to accommodate a disability. This grant provides a lifetime benefit of $6,800 for veterans with service-connected conditions.

Unlike the SAH and the SHA, the HISA provides money for veterans whose disability is unrelated to the time they served. If you became disabled after your service, you could receive up to $2,000 through a HISA grant.

Your state may offer additional benefits for veterans. Many states, including Florida, New York and Virginia, offer an exemption from property taxes for eligible veterans.

Some states, including California and Texas, offer low-interest home loans to resident veterans. Check with your state’s VA agency to see what additional housing benefits are available.