VA Loan Pre-Approval 2026: $0 Down, No PMI, Funding Fee

VA loans are the best mortgage program in America for eligible borrowers. Zero down payment, no PMI requirement (prohibited under 38 U.S.C. § 3703), rates that typically trade below the Freddie Mac PMMS conventional average, and the residual income test that often beats DTI as the controlling underwriting factor. This guide cites VA Pamphlet 26-7 (Lenders Handbook), 38 U.S.C. Chapter 37, 38 C.F.R. Part 36, and Public Law 116-23 (Blue Water Navy Vietnam Veterans Act, eliminating the VA loan limit since 1 January 2020).

Authority feed: Rates from Freddie Mac PMMS (week ending 2 July 2026; 30-year fixed 6.43%). Loan limits from FHFA and HUD. QM framework from CFPB 12 CFR § 1026.43. Last verified 3 July 2026. Full source ledger.

VA Loan Advantages

$0 Down Payment

No down payment required with full entitlement. Buy a $500,000 home with $0 out of pocket (closing costs still apply but can be seller-paid).

No PMI Ever

No private mortgage insurance at any loan-to-value ratio. This saves $150-$300/month compared to conventional with less than 20% down.

Competitive Rates

VA rates average 0.25-0.50% below conventional. Recent average: ~6.00% VA vs 6.43% conventional (Freddie Mac PMMS) on a 30-year fixed.

Flexible DTI

41% guideline but the residual income test is the real qualifier. Many veterans get approved above 41% DTI.

No Prepayment Penalty

Pay off your VA loan early without any penalty. Refinance freely when rates drop.

Assumable

VA loans can be assumed by qualified buyers. In a rising rate environment, this adds significant value to your home.

Eligibility Requirements

Active Duty

90 continuous days during wartime, or 181 days during peacetime, or 24 months

Veterans

Served required minimum and received other than dishonorable discharge

National Guard / Reserve

6 years of service, or 90 days activated under federal orders

Surviving Spouses

Spouse of service member who died in service or from service-connected disability (must be unmarried, with exceptions)

To prove eligibility, you need a Certificate of Eligibility (COE). Your lender can usually obtain this electronically through the VA Web LGY system in minutes.

The Residual Income Test

Unlike other loan types that focus primarily on DTI, the VA requires a minimum residual income after all obligations. This is the money left over for food, transportation, clothing, and other family expenses.

Family Size	Northeast	Midwest	South	West
1 person	$450	$441	$441	$491
2 people	$755	$738	$738	$823
3 people	$909	$889	$889	$990
4 people	$1,025	$1,003	$1,003	$1,117
5 people	$1,062	$1,039	$1,039	$1,158
Each additional	+$80	+$80	+$80	+$80

Source: VA Pamphlet 26-7, Chapter 4. For loans above $80,000. Amounts are monthly minimums.

VA Funding Fee Schedule

Down Payment	First Use	Subsequent Use	Fee on $400K Loan
Less than 5%	2.15%	3.30%	$8,600
5% to 9.99%	1.50%	1.50%	$5,700
10% or more	1.25%	1.25%	$4,500

Funding Fee Exemptions

The funding fee is waived for: veterans with a VA disability rating of 10% or higher, Purple Heart recipients serving on active duty, and surviving spouses receiving Dependency and Indemnity Compensation (DIC). If you are exempt, VA loans have zero upfront costs beyond closing.

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Frequently Asked Questions

Who is eligible for a VA loan?+

Per 38 U.S.C. § 3702 and VA Pamphlet 26-7 Chapter 2: active duty service members (90 days in wartime, 181 days in peacetime), veterans with honorable discharge, National Guard and Reserve members with 6+ years of service (or 90 days of active duty), and surviving spouses of service members who died in service or from a service-connected disability. You need a Certificate of Eligibility (COE) which can be obtained through your lender, online at eBenefits, or by mail with VA Form 26-1880.

Do VA loans have a maximum loan amount?+

No. Per Public Law 116-23 (the Blue Water Navy Vietnam Veterans Act of 2019, effective 1 January 2020) and 38 U.S.C. § 3703(a)(1), borrowers with full entitlement (first-time VA loan use or restored entitlement) have no VA loan limit. You can borrow any amount a lender will approve with $0 down. For borrowers with partial entitlement (existing VA loan outstanding), the limit is tied to the 2026 FHFA conforming limit. The VA guarantees a portion of the loan under 38 C.F.R. Part 36 rather than lending directly.

What is the VA funding fee and who is exempt?+

Per VA Pamphlet 26-7 Chapter 8 and 38 U.S.C. § 3729, the funding fee is a one-time charge. First-time use: 2.15% with under-5% down, 1.5% with 5-9.99% down, 1.25% with 10%+ down. Subsequent use: 3.3% with under-5% down. IRRRL refinances: 0.5%. The fee is typically financed into the loan. Exemptions per VA Pamphlet 26-7 Chapter 8.5: veterans receiving VA compensation for service-connected disability, Purple Heart recipients on active duty, and surviving spouses of veterans who died from service-connected disability.

What is the residual income test?+

Per VA Pamphlet 26-7 Chapter 4 and 38 C.F.R. § 36.4340(e), VA requires minimum residual income after PITI, recurring debts, and an estimated maintenance / utility allowance. The minimum varies by region (Northeast, Midwest, South, West) and family size, listed in Pamphlet 26-7 Chapter 4 Table 6. For a family of 4 in the West on a loan above $80,000, the minimum is $1,262/month. This test is unique to VA loans and often controls approval more than the 41% DTI guideline.

Can I use a VA loan more than once?+

Yes. Per VA Pamphlet 26-7 Chapter 2 and 38 U.S.C. § 3703, VA loan benefits can be used multiple times. If you sell the home and pay off the VA loan, your entitlement is fully restored. You can have two VA loans simultaneously if you have remaining entitlement. The funding fee increases for subsequent use (3.3% with under-5% down vs 2.15% for first use, per 38 U.S.C. § 3729), but the no-PMI and rate-discount benefits still apply.

How do VA loan rates compare to conventional?+

VA loan rates are typically 0.25-0.50% lower than the Freddie Mac PMMS conventional 30-year national average, because the VA guarantee (38 C.F.R. § 36.4302) reduces lender risk. Combined with $0 down payment and no PMI requirement (38 U.S.C. § 3703 prohibits PMI on VA loans), VA loans offer the best overall value of any mortgage program for eligible borrowers. The funding fee (2.15% first-time use under 38 U.S.C. § 3729) is the trade-off, waived for service-connected disability per VA Pamphlet 26-7 Chapter 8.5.