VA Home Loans in California: Entitlement, Funding Fee, CalVet and Appraisals

By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.

A VA-backed purchase loan lets an eligible service member, veteran or surviving spouse buy a home they’ll live in with no down payment, as long as the price isn’t above the appraised value, and with no private mortgage insurance (VA). Most first-time VA borrowers pay a one-time funding fee of 2.15% with less than 5% down, unless they’re exempt. California veterans can also look at CalVet Home Loans, a state program that often pairs with the federal VA guaranty.

Who qualifies for a VA home loan

You need a Certificate of Eligibility (COE), and you have to meet VA and lender credit and income standards. You must also plan to live in the home. VA’s service requirements include (VA eligibility):

• Currently serving: at least 90 continuous days.
• Veterans who served August 2, 1990, to now: generally 24 continuous months, or the full period you were called to active duty if it was at least 90 days. Shorter service can qualify after a discharge for a service-connected disability. Earlier service periods have their own rules.
• National Guard: 90 days of non-training Title 10 active duty, 90 days of qualifying Title 32 duty that includes 30 consecutive days, or 6 creditable years.
• Selected Reserve: 90 days of non-training active duty, or 6 creditable years.
• Surviving spouses: generally those who receive or are eligible for certain Dependency and Indemnity Compensation (D.I.C.), or the spouse of a service member who is MIA or a POW.

Getting the COE. You can request it online at VA.gov, have your lender pull it through VA’s system, or mail VA Form 26-1880. Mail is slower. Veterans usually need a DD214. Active-duty members need a signed statement of service (VA: request a COE). Order the COE before you write offers, because it shows how much entitlement you have.

Entitlement: how much VA guarantees

Entitlement is the portion of the loan VA guarantees to the lender. It’s what lets lenders offer no-down-payment loans. VA describes two tiers (VA loan limits):

• Basic entitlement covers loans of $144,000 or less and is printed on your COE.
• Bonus entitlement covers loans above $144,000. On those, VA guarantees up to 25% of the loan amount.

Full entitlement. If you’ve never used the benefit, or you’ve restored it, VA doesn’t set a loan limit. Your lender still decides how much you can borrow based on credit, income, debts and assets, and the loan can’t exceed the lower of the purchase price or the appraised value.

Remaining entitlement. If part of your entitlement is still tied up in another VA loan, the county loan limit comes into play. VA uses the FHFA one-unit conforming limit for the property’s county, even for a 2–4 unit property. VA’s formula is: county limit × 25%, minus the entitlement already charged. Most lenders want your entitlement plus any down payment to cover at least 25% of the loan.

This is a hypothetical example using VA’s published method. Your COE and lender make the actual calculation. Look up any county’s 2026 limit on FHFA’s conforming loan limit page.

The VA funding fee

The funding fee is a one-time charge that helps fund the program. On a purchase loan it’s the only closing cost that can be rolled into the loan amount (VA funding fee).

These are VA’s rates effective April 7, 2023, as posted on VA.gov at review. Check the current figure on VA’s funding fee page before you sign a Loan Estimate.

Who doesn’t pay it. VA exempts, among others:

• veterans receiving VA compensation for a service-connected disability, or eligible for it but receiving retirement or active-duty pay instead
• surviving spouses receiving D.I.C.
• service members with a proposed or memorandum disability rating issued before closing
• active-duty members who show evidence of a Purple Heart on or before closing

If VA later awards compensation with an effective date before your closing, you may be able to get a refund.

Closing costs and seller concessions on a VA loan

VA lists the costs a buyer may pay or negotiate with the seller: the VA appraisal fee, origination fee and discount points, the credit report, title insurance, recording fees, hazard insurance, and property taxes. VA doesn’t cap how much of a buyer’s closing costs a seller can pay. It does cap "seller concessions" at 4% of the home’s reasonable value from the VA Notice of Value. Concessions include things like the seller paying your funding fee or paying off a debt for you (VA).

In California, who pays which escrow and title costs is negotiated in the purchase agreement and often follows county custom. See who pays closing costs in California and our guide to seller concessions.

VA appraisal and property rules

After your COE, the lender orders a VA appraisal. VA is clear that the appraisal estimates market value and is not a home inspection (VA). The appraiser also checks the home against VA’s Minimum Property Requirements (MPRs). VA’s basic MPR checklist covers (VA MPR checklist):

• a continuing supply of safe drinking water, hot water and a safe method of sewage disposal
• heating adequate for healthful, comfortable living; if a wood stove is the main heat source, a permanent conventional system that keeps plumbed areas at 50°F or above
• a roof that keeps out moisture and has reasonable remaining life
• a crawl space that is accessible, vented, free of debris and free of standing water
• safe mechanical systems and electricity
• any nonresidential use kept secondary and limited to 25% of floor area

What this means in our counties. Rural parcels in Sonoma, Napa, Mendocino, Lake and El Dorado counties often run on wells and septic, and lenders will ask how the water and sewage requirements are met. Older homes with wood heat or crawl-space moisture can draw appraisal conditions. Plan your inspections early. See our guides to the termite report and Napa County wells and septic.

Eligible property types. VA lists single-family homes up to 4 units, condos in a VA-approved project, manufactured homes and lots, new construction, and homes bought with improvements, including energy upgrades like solar (VA purchase loan). If you’re looking at a condo, confirm VA approval of the project before you write the offer.

If the appraisal comes in low. Without a down payment, the VA loan can’t exceed the appraised value. Keep your appraisal contingency and loan contingency in place until the Notice of Value is in hand.

CalVet Home Loans: California’s alternative

CalVet Home Loans is the California Department of Veterans Affairs’ own home loan program. According to the state’s CA.gov service page for CalVet home loans:

• Eligibility: generally at least 90 days of active duty in wartime or peacetime (training excluded), an honorable discharge or one under honorable conditions, and no current CalVet loan. The home must be owner-occupied and in California.
• Financing: CalVet can often finance up to 100% by using the federal VA guaranty, with no monthly private mortgage insurance. A partial remaining VA guaranty may still work.
• Underwriting: No minimum credit score. Loans are manually underwritten. A past short sale, foreclosure or bankruptcy doesn’t automatically disqualify you.
• Servicing: CalVet services its loans for the life of the loan.
• Insurance: Coverage for fire, hazard, earthquake and flood.
• Property types: single-family homes, planned unit developments, VA-approved condos, manufactured homes on land, mobile homes in parks, and working farms.
• Other loans: construction, rehabilitation-purchase and home-improvement loans.

The CA.gov page doesn’t state current rates, maximum loan amounts or CalVet’s own fees. Confirm those directly with CalVet Home Loans or by phone at 866-653-2510 before you compare it with a standard VA offer. CalVet’s earthquake and flood coverage can matter for buyers in earthquake fault zones or North Bay flood zones.

CalHFA also offers a VA-guaranteed first mortgage through approved lenders (CalHFA).

Making a VA offer competitive in California

• Lead with your COE and a lender pre-approval so the seller knows your eligibility is already confirmed.
• Write realistic contingency periods that allow for the VA appraisal.
• Use concessions carefully. Ask the seller for closing-cost credits within VA’s rules rather than a higher price.
• Explain the process to the listing agent. VA’s appraisal and property rules are clear and predictable; a short explanation helps.

Ready to start? See how we work with buyers on our Buy page or contact us.

Questions people ask

Can I buy a home in California with no money down on a VA loan?

Yes, if you have enough entitlement and the price isn’t above the appraised value. You’ll still have closing costs and possibly a funding fee, though the funding fee can be financed and a seller can pay some costs (VA).

Is there a VA loan limit in California for 2026?

Not with full entitlement. With remaining entitlement, VA uses the county’s FHFA one-unit limit in its formula, for example $897,000 in Sonoma County and $1,249,125 in Marin (VA, FHFA).

How much is the VA funding fee?

On a purchase with less than 5% down, it’s 2.15% for first use and 3.3% after first use. With 5% or more down it’s 1.5%, and with 10% or more it’s 1.25%. Veterans receiving service-connected disability compensation are exempt (VA).

Can I use a VA loan on a duplex or fourplex?

VA lists homes up to 4 units as eligible, and you must live in the property. Your lender sets the rules for counting rental income.

Is the VA appraisal the same as a home inspection?

No. VA says the appraisal estimates value and isn’t an inspection. Hire your own inspectors during your contingency period.

Can a seller pay my closing costs on a VA loan?

Yes. VA doesn’t cap a seller’s payment of normal closing costs. Concessions beyond that, such as paying your funding fee, are capped at 4% of the reasonable value (VA).

What’s the difference between a VA loan and a CalVet loan?

A VA loan is made by a private lender and guaranteed by the federal VA. A CalVet loan is a California program that CalVet services itself. It often uses the VA guaranty and includes fire, hazard, earthquake and flood coverage (CA.gov).

Can I use my VA benefit more than once?

Yes. VA says you can use it again after selling or refinancing a VA-backed home. The funding fee is higher after first use unless you’re exempt or put 5% or more down.

Sources & notes

1. VA: Purchase loan: benefits, occupancy, property types.
2. VA: Eligibility requirements: service requirements.
3. VA: How to request a COE: documents and process; appraisal is not an inspection.
4. VA: Home loan limits and entitlement: tiers, 25% guaranty, use of FHFA limits.
5. VA: Funding fee and closing costs: rates effective April 7, 2023; exemptions; 4% concession cap.
6. VA: Basic Minimum Property Requirements checklist (training). The controlling text is Chapter 12 of VA Pamphlet 26-7, the Lender’s Handbook.
7. FHFA: 2026 county conforming loan limits.
8. CA.gov: CalVet home loans for veterans; program site calvet.ca.gov/HomeLoans.
9. CalHFA: Homebuyer loan programs.

The entitlement table is a hypothetical illustration of VA’s published formula. General information, not legal, tax or lending advice. Updated November 2026. Primary sources are linked in this guide.

Related: Appraisal contingency · Loan contingency · California escrow timeline · Financing