VA Loans, zero down and no monthly mortgage insurance, for those who earned it.

A VA loan is made by a private lender and guaranteed in part by the Department of Veterans Affairs. That guaranty stands in for a down payment, which is why an eligible borrower can buy with nothing down and pay no monthly mortgage insurance at all - the two costs that shape almost every other program. Eligibility runs to veterans, active-duty service members, many National Guard and Reserve members, and surviving spouses, and it's proved with a Certificate of Eligibility rather than assumed. Since the Blue Water Navy Vietnam Veterans Act of 2019 took effect on 1 January 2020, there's no VA loan limit for a borrower with full entitlement: the old county-limit table no longer caps what you can borrow, though the lender still has to be satisfied you can repay it.

The Funding Fee & Residual Income

Two costs and one test define a VA loan. The funding fee is a one-time charge that replaces mortgage insurance - 2.15% of the loan amount for a first-time use with no money down, 3.3% for a subsequent use, dropping to 1.5% at 5% down and 1.25% at 10% down for either. It can be financed into the loan, and it's waived outright for veterans receiving compensation for a service-connected disability, which is worth several thousand dollars and is missed surprisingly often. The test is residual income: VA is the only major program that checks how much discretionary income you have left each month after the mortgage, debts, taxes and estimated utilities, measured against a published regional minimum for your family size. It's a more forgiving measure than a debt-to-income ratio alone, and it's a large part of why VA loans have historically performed so well.

If you would like to explore whether a VA loan matches your purchase price, credit profile and long-term budget, reach out to 3E Lending to speak with our licensed Texas mortgage team in Katy.