What a VA loan actually is
The VA doesn't lend you the money. The U.S. Department of Veterans Affairs guarantees a portion of a loan made by an approved lender like Pacific Bay Lending. That guarantee lowers the lender's risk, which is what makes the program's standout features — no down payment and no monthly mortgage insurance — possible for borrowers who qualify.
The benefit was created to help those who served buy a home, and it has been doing exactly that since the original 1944 GI Bill. It is a lifetime benefit you can use more than once.
Who is eligible — and the Certificate of Eligibility (COE)
Eligibility is based on your service. The VA sets the service requirements, and they cover many active-duty service members, veterans, certain National Guard and Reserve members, and some surviving spouses. Service-based eligibility is a published program criterion — not a guarantee of approval, and not something we decide.
You prove eligibility with a Certificate of Eligibility (COE), which confirms to the lender that you have VA home-loan entitlement. You can request it through the VA, and in most cases we can pull it for you electronically when you apply. You still have to qualify on credit, income, and the property like any other loan.
Zero down payment and no monthly mortgage insurance
For an eligible borrower with full entitlement, a VA loan can finance up to the full purchase price — meaning 0% down on a primary residence, within the lender's qualifying limits. That is the single biggest reason the program is so valuable: it removes the down payment, the part that keeps most buyers renting.
Just as important, VA loans carry no monthly mortgage insurance. FHA charges annual MIP and conventional loans charge PMI under 20% down, but a VA borrower pays neither — which keeps the monthly payment lower than a comparable low-down-payment loan on another program.
The VA funding fee
In place of monthly mortgage insurance, most VA loans carry a one-time funding fee that helps keep the program self-sustaining. The fee is a percentage of the loan amount and can usually be financed into the loan rather than paid in cash at closing. The exact percentage depends on your down payment and whether it's your first use of the benefit — see the published schedule above.
Many borrowers are exempt from the funding fee entirely, including veterans receiving compensation for a service-connected disability and certain surviving spouses. We confirm whether an exemption applies to you so you never pay a fee you don't owe.
VA loan limits and entitlement
Since 2020, the VA does not cap the loan amount for eligible borrowers who have their full entitlement — you can borrow as much as the lender will approve based on your income and credit, with no VA-imposed ceiling and still no required down payment. If you have used part of your entitlement on another VA loan that is still open, partial-entitlement rules and county loan limits can come into play.
Tennessee is a heavy VA-purchase market — Clarksville and the Fort Campbell area especially — so this is a program we originate often. When you pre-qualify, we read your entitlement and tell you exactly what your VA buying power looks like.
