Quick answer
A VA loan lets eligible veterans, service members and some surviving spouses buy a primary residence with no down payment and no monthly mortgage insurance. You need a certificate of eligibility, a VA-approved lender, and a home that passes the VA appraisal and its minimum property requirements. The common snags are condos in projects the VA hasn't approved, repairs the appraiser requires, and appraisals that come in below the price.
By Ryan Kuchler
Ryan brings the analysis and process from years as a software architect and investor, and walks veteran clients through each step of the lending timeline.
Key points
- The VA guarantees part of the loan, generally 25%. That protects the lender and lets it offer no down payment and no monthly mortgage insurance. You still owe the full loan, and borrowers who aren't exempt pay a one-time funding fee.
- Even with no down payment, plan on cash for earnest money, the appraisal, your inspection and any closing costs the seller doesn't cover.
- The home must be your primary residence when you buy it. A VA purchase loan can't be used for a vacation home or an investment property.
- The home has to meet VA minimum property requirements, and a condo has to be in a VA-approved project. Ask about both before you write an offer.
Who qualifies
Eligibility depends on your service. The rules differ for active-duty members, veterans, the National Guard and Reserves, and surviving spouses.
A surviving spouse can qualify by being eligible for or receiving certain types of VA Dependency and Indemnity Compensation, or by being married to an active-duty service member who is missing in action or a prisoner of war.
Don't try to screen yourself. Your lender can often get your certificate of eligibility, or COE, from the VA in minutes, though some cases need service documents and take longer. You can also request it yourself through your VA.gov account.
What programs are available in California
| Program | What it does | Worth knowing |
|---|---|---|
| VA home loan (federal) | No monthly mortgage insurance, and no down payment with full entitlement, for eligible buyers | Primary residence only. One-time funding fee unless exempt. |
| CalVet home loan | A loan from the California Department of Veterans Affairs for veterans buying a home in California | It isn't a standard mortgage. The state holds the title and sells you the home under a contract of sale until it's paid off, so a later sale or refinance works differently. CalVet also offers a product that uses the VA guaranty, so compare the specific products. |
| Disabled Veterans' property tax exemption | A tax benefit, not a loan. California reduces the assessed value of a principal residence for some veterans with a service-connected disability. That includes veterans rated 100% disabled, paid at the 100% rate for unemployability, blind in both eyes, or who have lost the use of two or more limbs. Certain unmarried surviving spouses also qualify. | You have to apply with the Riverside County Assessor. The basic and low-income amounts adjust each year. |
How the lending process works
- Get your COE and a pre-approval. Pick a lender that does VA loans every week. A pre-approval means the lender has reviewed your credit and income. It's still conditional on the appraisal, title, underwriting and repairs.
- Shop and make an offer. Your agent writes the VA requirements into the contract, including the escape clause. If the home is a condo, check its VA status first.
- Order the VA appraisal. Your lender requests it through the VA, and a VA-assigned appraiser sets the value and checks the property against VA standards. You don't choose the appraiser. In California, order the termite report early, because it's needed before the VA issues its Notice of Value.
- Underwriting. The lender verifies your income, assets and credit and reviews the appraisal and title. In California, a spouse's debts can count even if the spouse isn't on the loan.
- Make any required repairs. Repairs the appraiser requires are generally finished before closing.
- Close and move in. You plan to move in as your primary residence, normally within about 60 days. There are limited exceptions, such as a spouse moving in while you're deployed.
What it costs
There's no monthly mortgage insurance, but borrowers who aren't exempt pay a one-time VA funding fee. These rates have been in effect since April 7, 2023:
- Less than 5% down: 2.15% of the loan for first use, 3.3% for later use
- 5% to under 10% down: 1.5%
- 10% or more down: 1.25%
The later-use rate applies when a previous use hasn't been restored. Paying off the earlier loan and restoring your entitlement can bring you back to the first-use rate.
Veterans who receive VA disability compensation don't pay the fee. Some others are exempt too, such as active-duty service members with a Purple Heart and certain surviving spouses, so ask your lender.
On a purchase, the funding fee is the only cost you can roll into the loan. Everything else is paid at closing, though seller or lender credits can cover it.
Plan for some cash out of pocket. Earnest money, the appraisal and your home inspection come due before closing, often before you know the sale will go through. The VA escape clause protects your earnest money only if the home appraises low. For everything else, your offer needs the right contingencies, with clear deadlines, for your inspection, financing and appraisal. Your earnest money can be at risk if you remove a contingency or miss a date. Your agent should guide you through each of those decisions, track the deadlines and protect your deposit. Seller concessions can help with other closing costs, but they have limits and aren't guaranteed, so ask your lender early for an estimate of your cash to close.
What the home has to pass
The VA appraiser values the home and checks it against the VA's minimum property requirements. In plain terms the home has to be safe, sound and sanitary. Common items:
- Working heating, plumbing and electrical systems
- A roof with reasonable life left. One near the end of its life can be flagged even if it doesn't leak.
- No active termite or wood-destroying pest damage
- Safe access to the property
- Cooling that works, if the home has it. The VA requires heating, not air conditioning, but expect the appraiser to want existing A/C working, which matters in the desert.
- Peeling or chipping paint repaired on homes built before 1978
- Water and sewer that meet local standards
The VA requires termite information for every California home before the Notice of Value. If it finds active infestation or damage, that has to be fixed before closing. Who pays is negotiable, so settle it in the contract. Confirm with your lender whether you, as the buyer, can pay for the inspection on your file.
The VA appraisal isn't a full home inspection. Order your own inspection too, especially on an older home.
Condos and HOAs
A condo generally has to be in a project the VA has approved. Look the project up in the VA's condo list before you make an offer. Getting an unlisted project approved takes time and depends on the association providing documents.
Ask your lender about it early.
Coachella Valley specifics
- Indian lease land. Parts of Palm Springs, Cathedral City, Rancho Mirage and nearby unincorporated land sit on land leased from the Agua Caliente Band of Cahuilla Indians, so you own the home but lease the ground. The lease must run, or be renewable at your option, for at least 14 years beyond the end of the loan, or until any earlier date when fee title passes to you. On a 30-year loan that means at least 44 years from closing, and a shorter loan term shortens the requirement. A renewal the tribe can refuse doesn't count. Find out how many years remain and who holds the renewal option before you make an offer.
- Duplexes and fourplexes. You can buy a property with up to four units if you live in one of them and rent the others long term. Short-term rentals are a separate matter. Cities and HOAs in the valley limit them, and you can't use the loan for a vacation rental.
- Homes in rented-space parks. These may not qualify for a VA loan, so ask a VA lender before you shop.
Common gotchas
- Buying a vacation home or rental. You have to live there.
- Unapproved condo projects. Check the VA status before you fall in love with a unit.
- Low appraisals. The escape clause lets you walk away with your earnest money. If you want the house, the deal may need renegotiating or extra cash.
- Required repairs. If the appraiser requires repairs, the lender generally won't close until they're done.
- Entitlement still in use. If you kept an earlier home bought with a VA loan, you may have less entitlement available than you expect and may need some cash down.
- Entitlement risk with loan assumptions. A qualified buyer can take over your VA loan, which can be valuable when rates are high. While the loan is outstanding, your entitlement is freed only if an eligible veteran substitutes their own. Otherwise it stays tied up until the loan is paid in full. Either way, get a release of liability so you're no longer on the hook for the debt. A release doesn't free your entitlement.
- Seller hesitation. Some sellers overstate how often VA deals fall apart. The extra steps are real, but they're manageable with a strong pre-approval, a clean offer, and early checks on condo status, termite and lease term.
- Tight timelines. The appraisal, the termite report and any condo approval can run long, so build time into your contract dates.
Work with an agent who knows the process
A VA loan is a very good deal for eligible buyers, but it works best when your agent, lender and contract all follow the VA's rules from day one. Send us a note if you're a veteran or active-duty service member looking in the Coachella Valley, and we'll help you check the property, the HOA and the timeline before you make an offer.
Frequently asked questions
Do I need a down payment for a VA loan?
Not if you have full entitlement and the home appraises at or above the price, but you may still need cash to close for things like earnest money, the appraisal, your inspection and closing costs the seller doesn't cover. The VA sets no loan limit in that case, but the lender decides how much you can borrow based on your income, debts and credit. If the appraisal comes in below the price, you cover the gap in cash. If part of your entitlement is still tied up in an earlier VA loan, the lender may ask for a down payment.
Is there a minimum credit score?
The VA doesn't set one. Each lender does, so shop around. A decline from one lender's credit rules isn't a VA denial.
Can the seller pay my closing costs?
Often, yes. The VA allows sellers to offer credits toward your closing costs, and it limits some seller concessions to 4% of the home's reasonable value. What counts toward that limit depends on the type of credit, so ask your lender how it applies to your offer. Seller credits are negotiated, so they're never guaranteed.
What if the home appraises for less than the price?
VA purchase contracts must include the VA escape clause when they're signed before the Notice of Value. In California it's often part of an FHA/VA amendatory clause addendum, and your lender must confirm it's there. If the value comes in under the price, you can walk away without losing your earnest money, renegotiate with the seller, or pay the difference in cash. The clause protects you on value only. It doesn't help if the seller refuses required repairs.
This article is general information, not legal, tax or lending advice. Rules change; confirm details with the relevant agency, your lender and a qualified professional.
