What is a GI Home Loan? | Rates & Requirements 2024

Aly Yale
Military VA Loan contributor

The GI Bill offers veterans, military members, and their loved ones many benefits. But one thing it doesn’t cover? That’d be buying a house.

Fortunately, if you’re looking to purchase a new home as a veteran or active-duty service member, you still have options. While there may not be a specific GI Bill home loan out there, there is a mortgage program designed just for military home buyers — and it’s one of the best home loan programs on the market.

Are you interested in using the VA loan program to buy a house? Let this VA home loan info guide the way.

Check your eligibility for a VA home loan here (Apr 12th, 2024)

Mortgage program for military home buyers

Dubbed the VA loan program, these military-only mortgages are some of the best financing options available. They’re backed by the Department of Veterans Affairs and offer low interest rates, come with no loan limits, and require zero down payment at all.

So while there is no official “GI home loan,” military borrowers have access to a VA home loan benefit, a great mortgage program intended to put homeownership into reach for veterans, active-duty service members and their families.

Check your eligibility for a VA home loan here (Apr 12th, 2024)

Benefits of a VA loan

VA loans come with countless benefits, but the biggest perk is that they require no down payment.

Unlike other mortgage programs, which ask for anywhere from 3% to 20% down, VA loans require no down payment at all. This can offer significant savings right off the bat. (A low-cost FHA loan requires at least $7,000 down on a $200,000 house, for example, while a VA loan requires $0 down).

Some other benefits of VA loans include:

  • Competitively low interest rates
  • No credit score requirements
  • Limits on closing costs
  • Loans are assumable, meaning future buyers can take over the loan (and the favorable rate and term it comes with)
  • No private mortgage insurance (PMI)
  • No loan limits
  • Can be used multiple times
Check your eligibility for a VA home loan here (Apr 12th, 2024)

VA loan mortgage rates 2024

When compared to other loan types — conventional loans and FHA loans, for example — VA home loans offer consistently lower rates than for the average consumer.

VA Conventional FHA
December 2023 6.33% 6.82% 6.80%
November 2023 6.93% 7.36% 7.11%
October 2023 7.34% 7.62% 7.39%
September 2023 6.90% 7.20% 7.07%
August 2023 6.99% 7.12% 6.22%

Source: Economic Research Federal Reserve Bank of St. Louis

A lower interest rate translates to a lower monthly mortgage payment and substantial savings over the life of your loan.

Qualify with GI Monthly Housing Allowance (MHA)

One last advantage? If you qualify for GI Bill benefits, you can actually use your GI Monthly Housing Allowance (MHA) to qualify for a VA loan. If you’re considering this option, talk to a VA lender. They can give you an idea of what your MHA qualifies you for.

VA loan eligibility & guidelines

For eligible borrowers, VA loans are usually the best mortgage option available. To qualify, borrowers must meet eligibility requirements set by the U.S. Department of Veterans Affairs and by the individual lender.

VA loan service eligibility requirements

VA loans are only for active-duty military members, veterans, and their families (including surviving spouses), so there are strict service requirements you’ll need to meet to qualify.

The exact standards depend on when you served, but generally speaking, you’ll need to have one of the following:

  • 90 consecutive days of active service during wartime
  • 181 days of active service during peacetime
  • 6 years of service in the National Guard or Reserves
  • A veteran/service member spouse who died in the line of duty or due to a service-related disability or injury

Qualifying for a VA loan

The VA doesn’t set specific financial standards for its loans, though private mortgage lenders — the companies who actually issue the loans — do. These vary from one lender to the next, but in most cases, borrowers need at least a 620 credit score and a debt-to-income ratio of 41% or less.

If you fall short of these requirements, you still might qualify. Just make sure to shop around for your lender, work on improving your credit, and consider making a down payment. These steps can all help you better qualify for a mortgage loan (VA or not).

VA loan property requirements

The VA home loan program is intended to help veterans and active-duty service members become homeowners. That means, with some rare exceptions, these homes are reserved for single-family homes that the borrower plans to use as a primary residence.

A VA appraisal will ensure the property meets the VA’s Minimum Property Requirements, to ensure the home is livable and worth the value of the loan.

See if you’re eligible for a VA home loan (Apr 12th, 2024)

Types of VA loans

You can use a VA loan to either purchase a property or refinance an existing one. In both cases, there are a few options.

These include:

  • VA Purchase Loans: These can be used to buy a home (up to four units), an approved condo, or a manufactured home. You can also use VA purchase loans to build a new construction property or purchase a home and renovate it
  • VA Streamline Refinance: Also known as a VA Interest Rate Reduction Refinance Loan (IRRRL), these streamlined refinance loans allow existing VA loan borrowers to lower their interest rates or get more favorable terms quickly and affordably.
  • Native American Direct Loans: These are VA loans reserved just for veterans of Native American descent. They can be used to buy, build, or renovate properties on federal trust lands or to refinance.
  • VA Cash-out Refinance Loans: These are VA loans that let you tap your home equity. They replace your existing VA loan with a larger-balance one and give you a lump-sum payment in return. Cash-out refinancing can be a good choice if you need to make repairs on your property or if you have unexpected or looming expenses to cover.
Check your eligibility for a VA home loan here (Apr 12th, 2024)

VA funding fee

The VA funding fee is a one-time fee you’ll pay at closing. It helps subsidize the VA loan program and keeps costs low for future VA borrowers. The exact fee depends on your loan type, the number of times you’ve used your VA loan benefits, and your down payment size.

VA home loan FAQ

How much is a typical GI home loan?

There is no GI Bill home loan, but VA loans have no loan limits. As long as you have your full entitlement, you can borrow as much as you need to purchase a property. Keep in mind, though, lenders have their own criteria for evaluating borrowers. These tend to be stricter on higher loan amounts.

What are the benefits of a VA home loan?

The VA housing loan is one of the most beneficial financing products out there. The VA guarantee means private lenders can afford to pass along valuable benefits to eligible veterans, active-duty service members and their families. These loans come with no mortgage insurance or down payment, they have low interest rates, and there are no credit score requirements or loan limits either.

How much house can I afford as a veteran?

That depends on your budget, the interest rate you qualify for, and the down payment you’re willing to make. You can use this VA home loan calculator to point you in the right direction.

What is a Certificate of Eligibility (COE)?

A Certificate of Eligibility is an official document from the VA that details your military service. Lenders use it to determine whether you meet the VA loan program’s service requirements, which are detailed above. You can retrieve your COE yourself through your eBenefits portal, or you can ask your chosen VA lender to request the document on your behalf.

Can I get a COE as the spouse of a Veteran?

You can get a Certificate of Eligibility as the spouse of a veteran in some cases, but not all. To qualify for a COE, your spouse will either need to be missing in action, a prisoner of war or have died while in service from a service-connected disability. There are some other nuances, too — especially if you’ve remarried, so be sure to check out the VA’s detailed rules here.

Can I get a Certificate of Eligibility (COE) for a VA direct or VA-backed home loan?

Certificates of Eligibility are required for all VA mortgages, including Native American Direct and VA-backed purchase and refinance loans.

How much is the VA funding fee?

Your VA funding fee will depend on a few factors, including the type of loan you’re using, whether you’re a first-time home buyer, and whether you’re making a down payment. Fees range anywhere from 0.5% to 3.6% of the total loan amount and is typically well-worth the VA loan savings it allows you to access. This money allows the U.S. Department of Veterans Affairs to continue to offer this valuable VA home loan benefit to qualified veterans, active-duty service members and their families.

GI home loans: The bottom line

While there is technically no such thing as a GI home loan, veterans and active-duty service members do have access to excellent VA mortgage program, which offers significant benefits including:

  • Zero down payment
  • Competitively low interest rates
  • No credit score requirements
  • Limits on closing costs
  • Loans are assumable, meaning future buyers can take over the loan (and the favorable rate and term it comes with)
  • No private mortgage insurance (PMI)
  • No loan limits
  • Can be used multiple times

If you’re ready to buy a home (or refinance one), a VA loan might be your best option.

Ready to buy a home with a VA loan? Start here (Apr 12th, 2024)