The VA home loan in retirement
No down payment, often no fee.
Retirees count too. Eligible for VA compensation but taking retired pay instead? You’re still exempt from the fee.
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1. Why retirees still qualify
Your VA home loan benefit comes from your service, so it doesn’t end at retirement. Lenders confirm it with a Certificate of Eligibility, which your lender can usually pull in minutes, or you can request through VA.gov. For a retiree buying a final home, downsizing or moving closer to family, it means:
- No down payment, and no VA loan limit if you have full entitlement. Your lender still decides what you can afford.
- No private mortgage insurance, unlike most low-down-payment loans.
- An assumable loan, which a buyer can take over later at your rate — a real selling point when rates are high.
2. The funding fee
| Down payment | First use | Later use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% to 9.99% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
| Receiving VA disability compensation | $0 — exempt | |
Paid the fee, then VA awarded you compensation with an effective date before your closing date? You can ask for a refund of the fee.
3. Using it again
- Sell and pay off the loan, and you can have your full entitlement restored for the next home.
- Paid it off but kept the house? VA allows a one-time restoration so you can buy again while keeping the old home.
- Still have a VA loan? Remaining entitlement may let you buy again without selling, though a down payment may be needed.
- Refinancing: a VA streamline refinance carries a 0.5% funding fee, and a cash-out refinance follows the first-use and later-use rates.
Before you buy, price the insurance: Warrior Insure covers homeowners insurance with a VA loan. Weighing a smaller home? See the downsizing math trap.
4. Frequently asked questions
Can military retirees use the VA home loan?
Yes. The benefit comes from your service, not your duty status, so military retirees remain eligible and can use it more than once.
Who doesn’t have to pay the VA funding fee?
Veterans who receive VA compensation for a service-connected disability, at any rating, are exempt. So are veterans eligible for that compensation who receive retired or active-duty pay instead, eligible surviving spouses receiving Dependency and Indemnity Compensation, and Purple Heart recipients on active duty.
How much is the VA funding fee?
For a purchase with less than 5% down, it is 2.15% of the loan on first use and 3.3% after that. With 5% to 9.99% down it is 1.5%, and with 10% or more down it is 1.25%, for first or later use.
Is there a limit on how much I can borrow with a VA loan?
VA has no loan limit for borrowers with full entitlement. Your lender still sets the amount based on your income, credit and debts, and borrowers with entitlement tied up in another loan may face a limit.