To use a VA loan in California you need a Certificate of Eligibility (based on service), a workable credit score (VA sets no minimum; lenders overlay ~580–620), a manageable DTI paired with sufficient residual income, and an eligible primary residence that passes the VA appraisal. You put $0 down, pay no monthly mortgage insurance, and pay a one-time funding fee (2026: 2.15% first-use/no-down, less with a down payment, $0 if exempt). With full entitlement there's no loan limit. Who qualifies by service is covered on Eligibility.
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The $0 down benefit — and no monthly MI
This is the headline. Eligible veterans and service members can buy a home with zero down payment and no monthly mortgage insurance. FHA charges lifetime MIP; conventional charges PMI until 20% equity; VA charges neither. That combination — no down, no MI — is why the VA loan is often the cheapest path to homeownership for those who've earned it. You can still put money down if you want (it lowers the funding fee), but you're never required to.
The 2026 VA funding fee
In place of mortgage insurance, VA charges a one-time funding fee that sustains the program. It can be financed into the loan, and it's completely waived for exempt borrowers. The 2026 rates (unchanged since 2023):
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% (incl. $0) | 2.15% | 3.30% |
| 5% – 9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
A few key points: the IRRRL streamline refinance fee is just 0.50%; a cash-out refinance mirrors the purchase first/subsequent structure but doesn't drop with a down payment. Note that putting 5% down wipes out the subsequent-use penalty entirely. And new for 2026: the funding fee is tax-deductible for those who qualify (treated like upfront mortgage insurance — check with a tax professional).
Credit & debt-to-income
| Requirement | The standard |
|---|---|
| Credit score | No VA minimum; lenders overlay ~580–620 |
| DTI benchmark | ~41% is the guideline, but flexible with strong residual income |
| Down payment | $0 with full entitlement |
| Mortgage insurance | None — ever |
| Occupancy | Primary residence (see Eligibility) |
The VA itself sets no minimum credit score — lenders do, and those overlays vary, which is exactly where a broker helps. The ~41% DTI figure is a guideline, not a hard wall: VA underwriting leans heavily on residual income, so buyers routinely qualify above 41% when their cash flow is strong.
Residual income — the VA's secret ingredient
Here's what makes VA underwriting different. Beyond DTI, the VA requires enough residual income — the money left each month after your mortgage, debts, taxes, and basic living costs. The minimum varies by family size and region (California is in the West region). This test is why VA loans have such low default rates and why they're forgiving on DTI: a buyer with a 45%+ DTI but healthy leftover income can still be a strong VA file. It's a genuine advantage most buyers have never heard of.
Loan limits & entitlement
Since 2020, veterans with full entitlement have no VA loan limit — you can borrow above the conforming limit with $0 down, subject to lender approval. That's a big deal in high-cost California. County loan limits only apply if your entitlement is reduced — for example, if you have an active VA loan or previously defaulted. In those partial-entitlement cases, limits track the conforming figures (2026: $832,750 baseline up to $1,249,125 in high-cost counties), and a down payment may be needed above them. We'll pull your Certificate of Eligibility to confirm your entitlement.
The VA appraisal & property requirements
Like FHA, the VA appraisal checks value and condition. A VA-approved appraiser confirms the home meets the VA's Minimum Property Requirements (MPRs) — safe, structurally sound, and sanitary — and issues a Notice of Value. The property must be a primary residence (single-family, approved condo, or a multi-unit you'll occupy). As-is or fixer homes can hit snags on MPRs, similar to FHA. Property specifics are on Eligibility.
VA requirements FAQs
What credit score do I need?
No VA minimum; lenders overlay ~580–620. A broker can find lenders that work with lower scores.
How much is the 2026 funding fee?
2.15% first-use/no-down, dropping to 1.50% (5% down) or 1.25% (10% down). Subsequent use is 3.30% with no down. $0 if you're exempt.
Do VA loans have loan limits?
Not with full entitlement — no limit, $0 down, subject to lender approval. Limits only apply with reduced/partial entitlement. See Eligibility.
What is residual income?
The money left each month after major expenses. VA uses it alongside DTI, which is why many buyers qualify even above 41% DTI.
Is there mortgage insurance?
No — no monthly MI, ever. The one-time funding fee replaces it and can be financed or waived if exempt.
Reviewed by the licensing team at Save Financial, a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766) founded in 2009 and serving all 58 counties from offices in Newport Beach and Marina del Rey.