California loan guide
VA Loan in California
A VA loan in California is guaranteed by the Department of Veterans Affairs, allows a purchase with no down payment for a borrower with full entitlement, charges no monthly mortgage insurance, and charges a one-time funding fee that most borrowers finance.
In this guide
Key numbers
| Item | Figure | Source |
|---|---|---|
| Funding fee, first use, down payment under 5 percent | 2.15 percent | VA, Funding fee and loan closing costs |
| Funding fee, after first use, down payment under 5 percent | 3.3 percent | VA, Funding fee and loan closing costs |
| Funding fee, down payment of 5 percent or more | 1.5 percent | VA, Funding fee and loan closing costs |
| Funding fee, down payment of 10 percent or more | 1.25 percent | VA, Funding fee and loan closing costs |
| Loan limit with full entitlement | No VA loan limit | VA, Home loan entitlement and limits |
| Seller concessions cap | 4 percent of the home's reasonable value | VA, Funding fee and loan closing costs |
The funding fee chart in use is effective April 7, 2023.
Who it fits, and who should look elsewhere
A VA loan fits an eligible veteran, service member, or qualifying surviving spouse who wants to preserve cash, avoid monthly mortgage insurance, and buy a home to live in. In California it fits high-price purchases better than any other low-down-payment program because full entitlement removes the loan limit while lender approval still controls the amount. Look elsewhere when service eligibility is absent, when the property will not be a principal residence, or when a strong-credit buyer with a large down payment finds conventional total cost lower after the funding fee is counted. A buyer exempt from the funding fee should price VA financing first in almost every comparison, because the largest VA cost disappears while the no-monthly-insurance benefit remains.
Requirements: program rules and lender overlays
Program rules
Eligibility rests on service history and is documented by a Certificate of Eligibility, which the lender can usually obtain electronically. The home must be a principal residence, the loan must pass VA appraisal and minimum property requirements, and the borrower must show stable income and acceptable credit history under VA residual-income and debt-ratio review.
VA sets no minimum credit score, and lenders set their own credit requirements, so a score floor quoted by one lender is an overlay rather than a VA rule.
If part of the entitlement is still tied up in another VA loan, remaining entitlement is 25 percent of the county conforming limit minus the entitlement already used, and lenders usually require a down payment covering 25 percent of any shortfall above that remaining entitlement.
Lender overlays
Overlays in VA lending commonly include a lender-set credit floor, reserve expectations on large loans, and stricter treatment of condominiums, manufactured housing, and properties with condition issues. VA approval of a condominium project is a program step, not an overlay, and it should be checked before an offer because project approval cannot be created on a purchase-contract timeline.
Real costs
| Cost | How it works |
|---|---|
| Funding fee | One-time percentage of the loan amount from the table above; it can be paid in cash or financed, and financing it raises the balance and the interest paid over time. |
| Monthly mortgage insurance | None. VA loans carry no monthly mortgage insurance at any down payment level. |
| Closing costs | Appraisal, lender, title, escrow, recording, and prepaid items; some charges cannot be paid by the veteran under VA rules, which affects how an offer is written. |
A borrower does not pay the funding fee if the borrower receives VA compensation for a service-connected disability, is eligible for that compensation but receives retirement or active-duty pay instead, receives Dependency and Indemnity Compensation as a surviving spouse, has a pre-discharge proposed or memorandum rating showing eligibility for compensation, or is an active-duty Purple Heart recipient.
A disability rating that pays no compensation, such as a 0 percent rating, does not by itself exempt a borrower from the funding fee.
Seller concessions are limited to 4 percent of the home's reasonable value, although sellers can still pay ordinary closing costs outside that concession cap.
A worked California example
On a $650,000 purchase with no down payment, the base loan is $650,000.
The first-use funding fee at 2.15 percent of $650,000 is $13,975, and financing it gives a final loan amount of $663,975.
With full entitlement there is no VA loan limit to classify the loan against, so the classification question is lender approval and appraisal value rather than a county ceiling. The example uses no rate and quotes no payment, because the funding-fee arithmetic is complete without one and a payment would require a borrower-specific rate.
How a purchase proceeds, step by step
Application, Certificate of Eligibility, and Loan Estimate
A VA purchase begins with service eligibility, so the lender pulls the borrower's Certificate of Eligibility, usually electronically, before the file is priced as a VA loan. Obtain the Certificate of Eligibility early, because entitlement status on it decides whether a loan limit applies at all. The application itself covers income, assets, debts, and the property, and the lender must deliver or mail the Loan Estimate within three business days after receiving it, with the funding fee treatment, financed or paid in cash, visible in the figures the borrower compares.
VA underwriting: residual income alongside ratios
Documentation includes pay records, tax documents where the file calls for them, bank statements, and explanations for deposits or credit events, plus the service and entitlement records behind the certificate. VA underwriting tests earnings stability and continuance and then applies the program's distinctive second screen, residual income left after debts and household costs, alongside the debt ratio rather than the ratio alone. No VA credit-score floor exists at this stage; any score minimum in the answer came from the lender as an overlay.
VA appraisal and the Notice of Value
A VA-assigned appraiser values the property and checks it against VA minimum property requirements, and the outcome is issued as a Notice of Value that governs the transaction. The loan is figured against the lesser of the contract price or the value VA assigns, so a Notice of Value below the price caps the loan at that value and the buyer must cover the difference in cash within VA rules, renegotiate, or lose the home to the next buyer.
Conditions, funding fee, and the Closing Disclosure
Satisfy each underwriting condition in writing, and check the closing figures for the funding fee and for the seller-concession limit that VA applies to what a seller may pay beyond ordinary closing costs. The Closing Disclosure has to reach the borrower at least three business days before consummation, and certain post-delivery changes restart that three-business-day period, so a late correction to the fee or the value can move a VA closing just as it can any other.
Signing and funding a VA purchase
Signing a VA purchase opens no federal rescission period, because the purchase is a residential mortgage transaction and rescission under Regulation Z is a refinance protection. On a principal-home refinance that protection generally runs to midnight of the third business day after the last of consummation, delivery of the rescission notice, or delivery of all material disclosures, and when the refinance is placed again with the same creditor only the new money can be rescinded. With the purchase signed, the lender funds the loan, the deed records, and the contract sets when the veteran gets the keys.
Mistakes and downsides that cost money
Assuming a disability rating automatically removes the funding fee. A non-compensable 0 percent rating leaves the fee in place, which on the worked example would be a budgeting error of $13,975.
Financing the fee without counting it. The financed fee is borrowed money that accrues interest for as long as it remains in the balance, so paying it in cash can be cheaper for a buyer who has cash beyond reserves.
Ignoring remaining entitlement on a second use. A prior VA loan that was never restored can turn an expected no-down-payment purchase into one requiring a substantial down payment under the entitlement math above.
Writing an offer on an unapproved condominium. Project approval is checked against VA records, and a unit in an unapproved project cannot close as a VA loan on a normal timeline.
CalVet Home Loans: a separate California program
CalVet Home Loans is a California state program run by the California Department of Veterans Affairs, separate from the federal VA home loan guarantee described in the rest of the guide.
Its structure is different: CalVet buys the property and sells it to the veteran under a contract of sale, holding legal title until the price is paid, while the veteran holds equitable title.
Eligibility is California-specific: CalVet says a veteran must be purchasing an owner-occupied home in California, must have served on active duty for at least 90 days during wartime or peacetime (excluding training), must have a discharge under honorable conditions, and must not have a current CalVet Home Loan.
Compare the two when you are buying in California and could use either route, because the programs are not the same product: the title structure differs, the decision-maker differs, and CalVet can combine a federal loan benefit with state benefits, so the full terms of each offer need to be checked side by side rather than assumed to match.
Questions buyers ask
Is there a VA loan limit in California?
A borrower with full entitlement has no VA loan limit, while a borrower with entitlement tied up in another VA loan has a limit figured from the county conforming limit and the entitlement already used.
How much is the VA funding fee?
For a purchase, the fee is 2.15 percent on first use and 3.3 percent after first use when the down payment is under 5 percent, 1.5 percent with 5 percent or more down, and 1.25 percent with 10 percent or more down.
Who is exempt from the funding fee?
Exemption follows compensation status rather than the existence of a rating, covering borrowers receiving disability compensation, eligible borrowers receiving retirement or active-duty pay instead, surviving spouses receiving Dependency and Indemnity Compensation, borrowers with a qualifying pre-discharge rating, and active-duty Purple Heart recipients.
Does VA require a minimum credit score?
VA requires no minimum credit score, and each lender sets its own floor, so answers differ by lender.
Is CalVet the same as a VA loan?
No — CalVet is the state's own home loan program, and CalVet says it can combine your federal loan benefit with state benefits, which is why a California buyer should price both routes rather than treating them as the same program.
Can a VA loan be used more than once?
Yes, the benefit is reusable when entitlement is available or restored after a prior VA loan is paid off through a sale or refinance. The funding-fee tier changes after first use, which is why the fee table separates first use from later use.
Sources
- VA, Funding Fee and Loan Closing Costs, funding fee chart effective April 7, 2023; fetched October 14, 2026.
- VA, VA Home Loan Entitlement and Limits; fetched October 14, 2026.
- CFPB, Regulation Z, 12 CFR 1026.19 and 1026.23; fetched October 14, 2026.
- CA.gov, CalVet home loans for veterans (California Department of Veterans Affairs service page, linking to calvet.ca.gov); fetched October 14, 2026.
- California Board of Equalization letter 625_0240, on Cal-Vet contracts of sale; fetched October 14, 2026.
