Veterans and servicemembers with VA home loans sometimes face financial challenges, making it difficult to keep up with mortgage payments. Fortunately, the Department of Veterans Affairs (VA) offers a variety of mortgage relief options designed to help borrowers avoid foreclosure, reduce monthly payments, and stay in their homes.
Understanding VA Home Loans
You might qualify for a loan guaranteed by the U.S. Department of Veterans Affairs (VA) if you're a:
- servicemember
- veteran
- reservist
- National Guard member or
- eligible surviving spouse.
The VA guarantees this type of loan, which means it reimburses the lender for any losses if the borrower doesn’t repay the debt. VA also offers a direct loan program, where the VA is the lender.
Required Credit Score to Get a VA-Guaranteed Loan
Borrowers generally must have a FICO credit score of around 620 or higher to get a VA loan.
Down Payment for a VA Home Loan
One significant upside to a VA-guaranteed loan is that a borrower usually doesn’t have to make a down payment.
Interest Rate on a VA Home Loan
VA loans have competitive interest rates.
Mortgage Insurance Cost
Another advantage to a VA-guaranteed loan is that a borrower doesn’t have to pay for mortgage insurance. However, borrowers typically have to pay a funding fee—a one-time charge between 1.25% and 3.6% of the loan amount.
The fee amount depends on factors like the borrower’s down payment and whether the borrower previously took out a VA-guaranteed loan. The fee helps the VA cover losses on loans that go into default. But borrowers don’t have to come up with this money upfront; it's usually financed into the loan amount.
Who’s a Good Fit for a VA-Guaranteed Loan
Because VA-guaranteed loans ordinarily don’t require a down payment or mortgage insurance, anyone who qualifies often gets a good deal when taking out this type of loan.
Repayment Plan
If you’ve missed just a couple of mortgage payments, your loan servicer might let you pay the missed amounts by adding them to your regular payments. You'll have to pay extra to cover the payments you’ve missed.
Special Forbearances for VA Loans
With a forbearance, the loan servicer agrees to suspend all payments or accept reduced payments for a specific period, typically three or four months.
A forbearance isn't the same as loan forgiveness; you'll still owe the skipped amounts after the forbearance period ends. Usually, the servicer will, for example, take a lump-sum payment, offer a payment plan, or provide a modification in which the unpaid amounts get added to the loan balance.
Loan Modification Options for VA-Guaranteed Loans
With a loan modification, the lender agrees to change some aspect of your mortgage loan, such as lowering the interest rate or extending the term. In a modification, the servicer usually adds the missed mortgage payments and any related legal costs to your total loan balance.
Different types of modifications, like traditional modifications, streamline modifications, and special disaster modifications, might be available.
Under federal law, the terms of any VA-guaranteed loan can be modified without the prior approval of the VA if specific regulatory conditions are satisfied. (38 C.F.R. § 36.4315 (2025).)
Loan Deferment
Under a loan deferment, the servicer defers repayment of the arrearages (principal, interest, taxes, and insurance) to the loan maturity date or until the borrower refinances the loan, transfers the property, or pays off the loan.
Interest Rate Reduction Refinance Loans (IRRRLs)
A VA streamline refinance, officially called an “Interest Rate Reduction Refinance Loan” (IRRRL), is a VA-guaranteed loan that lowers the interest rate. As a result, the monthly principal and interest payments go down.
“Refunding” the Loan
In a refunding, the VA buys the loan and takes over the servicing. So, in this context, “refunding” means “to fund again.” The VA will then work with you on finding a way to avoid foreclosure.
Refundings don’t happen very often, but if you’re having trouble making the payments, you might qualify. To find out about a potential refunding, call your servicer. You can also contact a VA regional center to learn more.
Other Options for Veterans and Servicemembers
If you're not eligible for any of the previous options, you might consider looking into whether you qualify for a:
- extra time to sell the property on your own
- loan assumption (you sell or transfer the property to someone else, and that person takes over the mortgage payments)
- compromise sale (short sale), or
- deed in lieu of foreclosure.
Steps to Apply for VA Mortgage Relief
To apply for any of the mortgage relief programs discussed in this article, contact your loan servicer.
Additional Help for Veterans and Servicemembers
If you have a VA-guaranteed loan, the VA can provide a technician to work with your loan servicer on your behalf and provide you with financial counseling. To locate the nearest VA Regional Loan Center near you, go to the VA’s Regional Loan Center Contact Information website.
Also, you can get free help from a HUD-approved housing counselor.
For more information on what to do if you’re struggling with your mortgage payments, go to the Department of Veterans Affairs website.