Top VA Home Loan Terms

Your lender should know the below terms, but it's still wise to become familiar yourself. After you've done that, check out our top-rated picks for VA lenders!

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The VA has never been a truly simple process. So, we’ve decided to put together a list of some of the most common words you’ll hear in reference to a VA home loan, to make life a little easier. Some terms you may be familiar with, while others may seem completely foreign. This is not a full list of VA home loan terms, but we think it’s a pretty good start. If you have any more key terms or phrases you think we should add, feel free to leave them in the comment section below.

VA Home Loan Terms

Funding Fee

A VA Funding Fee is intended to help reduce the loan’s cost to taxpayers. Now, you might be thinking, what do taxpayers have to do with my loan cost? Last I checked no one is paying for my loan.

This is true. Taxpayers aren’t dishing out any money to help you with your loan process. The VA Funding Fee is meant to keep that from happening. By the VA not requiring taxpayers to dig a little deeper into their pockets, they can make sure future homebuyers have VA Home Loans available for them too.

If you served as a regular, active duty service member and you put no money down on your first VA home loan, you’ll pay 2.15%, or 3.3% if you’re applying for subsequent use. As a Guard or Reserve member, you’ll pay 2.4% or 3.3%.

Funding Fee Exemption

A funding fee exemption is exactly what it sounds like, an exemption from paying the funding fee. This is available to veterans with a disability rating through the VA.

VA vs FHA Loan

VA Tidewater Initiative

The tidewater initiative happens when a VA appraiser says the house you want to buy is worth less than what you are saying you’ll be paying for the house. 

Land Loan

A land loan is a term used to describe a piece of property without a house on it. The VA does not approve of a land loan. However, if you have plans to build or bring a prefabricated home onto the land and live in it within a designated period of time, the VA will approve the purchase.

Home Improvement Loan

A home improvement loan is given to qualifying veterans or service members who need to make improvements to the home before they move in. This can be rolled into your VA loan but must be listed with detailed plans and dates of completion. You cannot make these improvements on your own and an approved contractor must be hired.

Construction Loan

A construction loan is a loan to build a house on the land you intend to purchase. In a true VA construction loan, payments do not start until the house has been completed.

VA Streamlined Loan

A VA streamline loan is a refinance with little to no extra fees involved for the process. These typically only get approved if the individual refinancing will save money or be able to go from an adjustable to a fixed interest rate.

VA Loan vs Conventional

Loan Limits

Loan limits are based on what county you live in. While you can get a loan greater than the limit, doing so means you’ll most likely have to put a down payment on your purchase.

Guaranteed Home Loan

A guaranteed home loan refers to a veteran being guaranteed a VA loan on the terms that they first qualify for a VA loan and that they can financially afford it. Many individuals who would not normally be able to purchase a home because they cannot afford a 20% down payment are now able to do so with a guaranteed home loan backed through the VA.

Certificate of Eligibility

A certificate of eligibility proves to the lender that you qualify for a VA approved loan.

Home Loan Entitlements

Home loan entitlements refer to the amount of money you can use to purchase a home (which is a result of your loan limit). These entitlements are restored if you sell the home or the loan is paid off.

VA Farm Loan

The VA does not offer a farm loan. However, they will support a VA loan for a farm so long as the primary residence is also on the property.

Restoration of Entitlement

Restoration of entitlements refers to a qualifying member being able to purchase a second home because they have sold a home or have transferred the loan to another qualifying veteran, in which case it is as if you never used your entitlements in the first place.

VA Closing Costs

A VA loan does not mean there are no closing costs. Closing costs and down payments are two different things. However, the closing costs can be rolled into the loan so you are not paying them upfront.

VA Interest Rates

The VA does not actually provide your loan, however, when you get an approved VA loan, you might qualify for cheaper interest rates as a result.

Assumable VA Loan

An assumable VA loan means that you are transferring your loan to another qualifying veteran or service member. The qualifying individual will take over the remainder of your loan.

VA Jumbo Loan

A VA jumbo loan refers to a house that requires a loan larger than the counties loan limit. For example, if you want a house for $500,000 but your county’s loan limit is $484,350, you will require a jumbo loan. You’ll most likely be required to make a down payment as well.

VA Approved Lender

A VA approved lender is any lender the VA has approved. This is not hard to find and the VA approves most major lenders.

Estimated Reasonable Value

The VA issues something called a certificate of reasonable value, referring to the estimated reasonable value of a home. This is needed before you can get a VA loan. It is based on the appraiser’s estimated value of the home and will show the maximum value of the home and how much the VA is willing to approve for a loan.

Other VA Terms, Programs

Veterans United Lighthouse Program

The Veterans United Lighthouse Program is intended to help individuals that need their credit score improved for lenders to provide them with a loan or individuals who want to increase their credit score for a better interest rate once they are looking to purchase a home.

Service Eligibility

Service eligibility refers to what type of service qualifies someone for a VA loan.

Borrowers may be eligible for a VA Loan if they meet one or more of the following conditions:

  • They have served 90 consecutive days of active service during wartime
  • They have served 181 days of active service during peacetime
  • They have more than 6 years of service in the National Guard or Reserves
  • Spouses of military members who died while on active duty or as a result of a service-related disability may also be eligible

Private Mortgage Insurance

Private Mortgage Insurance, also commonly referred to as PMI is not required for a VA loan.

VA Home Loan Guide

Specially Adapted Housing Grant

Specially adapted housing grants are for veterans who need a grant to specialize their home to fit their needs, based on a service-connected disability. For example, installing a wheelchair ramp.

VA Business Loan

The VA does not offer a business loan, as an approved VA loan is intended to help purchase a primary residence.

VA Pre-Purchase Counseling

Pre-purchase counseling is a counseling service to help individuals understand the cost of owning a home and help you budget properly for your future home purchase.

Loan Repayment

Loan repayment is required with any loan, including a VA loan. You have 30 years and 32 days to pay off a VA loan.

Equal Housing Opportunity 

Equal housing opportunity is put in place to ensure a person is not ineligible for the purchase of a home because of personal preferences or discrimination.


Blockbusting refers to getting an owner to sell their property to prevent a different race or class from moving into the neighborhood and in turn making a better profit by reselling the home for more money.


U.S. Department of Housing and Urban Development


Federal Housing Administration


A lien can be placed on your home as a result of owing a debt to another person. For example, if a contractor were doing work on your home and you failed to pay them, they might take a lien out on your house, which would keep you from selling until the debt is paid off.

Down Payment Requirements

Utilizing a VA loan typically results in not having a down payment requirement. However, if your loan were to exceed the county’s loan limit or you wanted a lower mortgage payment, you might have to or want to consider making a down payment.

Traditional Fixed-Payment Mortgage

A traditional fixed-payment mortgage is a 3-year loan with a fixed interest rate.

Graduated Payment Mortgage

Graduated payment mortgage refers to a payment plan that typically starts out cheaper and gradually increases over time. Usually, these are mortgage payments for younger buyers who might not be able to make larger payments at their current stage of life but should be able to at a later date.


This is a process of a buyer refinancing for a lower interest rate. This is typically over the first few years of mortgage payments.

Growing Equity Mortgage

A growing equity mortgage is similar to a graduated payment mortgage. It is a fixed rate where the payments increase over time, based on a set timeframe. The interest rate will never increase since it is fixed. Unlike a Graduate payment mortgage, there is no negative amortization.

Adjustable Rate Mortgage

An adjustable rate mortgage or ARM means that your interest rate will fluctuate. It typically stays fixed for a few years (normally 5 years) and will reset after. An adjustable rate can increase or decrease, and there is usually a limit to the amount your interest rate can increase over the life of your loan.

Veterans United

★★★★★ Learn More

Quicken Loans

★★★★★ Learn More

JG Wentworth

★★★★★ Learn More

Lending Tree

★★★★★ Learn More


★★★★★ Learn More

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