VA Loan Benefits Most Veterans Never Use — But Should

A VA loan is a benefit you earned, and most veterans use only the first piece of it. The headline is no down payment. The rest of the program is what loan officers rarely walk through.

I do VA loans every week, and here’s what I make sure every veteran knows before they sign anything.

What are the main VA loan benefits?

VA says nearly 90% of VA-backed loans are made with no down payment. VA loans also don’t carry monthly mortgage insurance, which is a big reason the payment compares well to a conventional loan with a small down payment. In exchange, most borrowers pay a one-time VA funding fee. I explain who’s exempt and how it works in VA Funding Fee: What It Is, and What It Is Not.

To use the benefit, you apply for a Certificate of Eligibility, which shows the lender you qualify based on your service. A good loan officer can often pull it for you.

What VA loan types are there?

VA lists four programs on its home loans page, and most veterans only know the first.

• Purchase loans. The one everyone knows.
• Interest Rate Reduction Refinance Loan (IRRRL). A streamlined refinance of an existing VA loan to lower your rate.
• Cash-out refinance. Lets you refinance and take cash from your equity.
• Native American Direct Loans. For eligible Native American veterans.

Using these well can save real money. If you took out a VA loan when rates were higher, an IRRRL may be worth a look. See my VA loan page for the details of each one.

The edge: the multi-unit benefit

Here’s the one most veterans miss. VA financing is built around occupancy, which means you have to live in the home. But a VA loan can be used on a property with up to four units, as long as you occupy one of them. You live in one unit and rent out the others, and the rent can help cover the payment.

In my experience that can be one of the strongest wealth-building moves available to a veteran. It only works when the numbers work and you understand what being a landlord means: vacancies, repairs and tenant rules. I help veterans run those numbers before they make an offer, because a duplex that looks great on a listing can look very different with real taxes and insurance.

Can veterans use the benefit more than once?

Often, yes, though your remaining entitlement matters, and I’m not certain how it works in every situation. If you used your VA benefit before, don’t assume it’s gone. Entitlement can be restored in some cases, and some veterans can have more than one VA loan. Before you give up on it, ask a VA specialist to check your Certificate of Eligibility and your remaining entitlement.

Are VA loans good for self-employed veterans?

They can be, but VA doesn’t remove the income question. A VA loan solves the down payment, not the income documentation. A self-employed veteran still has to document income, usually through tax returns. I cover that in Mortgage Rates Hit 7.28%: What That Number Means for a Self-Employed Veteran.

What to ask before you start

1. Do I have my Certificate of Eligibility, and how much entitlement do I have left?
2. Am I exempt from the funding fee because of a disability rating?
3. Would a multi-unit property work for my situation?
4. Do I already have a VA loan that an IRRRL could improve?
5. What does the full monthly payment look like, including taxes and insurance?
6. Did the loan officer compare VA and conventional options side by side?

If someone quoted you a generic rate without a VA comparison, have a specialist who runs VA loans every week take a second look.

I’m a mortgage broker with NEXA Lending, and I work with borrowers in all nine states where I’m licensed (CA, CO, TX, FL, GA, NC, SC, TN, VA). As a broker, I can shop your loan across a wide network of lenders instead of being stuck with one bank’s programs. Programs, rates and approval depend on your full file, and individual rates vary.

Sources: VA, Home Loans (opens in a new tab), VA, Funding fee and closing costs (opens in a new tab).