Two things are true about VA loans here. They are the strongest zero down financing available to anyone in the Richmond area, and they still get quietly discounted by listing agents who have never closed one. Both facts cost somebody money, usually the veteran.
The Richmond region has a large veteran and military connected population, and the U.S. Army Garrison Fort Lee, home of the Combined Arms Support Command, sits a short drive south of the metro. Commuters from that installation shop the southern half of Chesterfield County constantly, which is why VA financing shows up on contracts in Ettrick and around Chesterfield Court House far more often than national averages would suggest.
Entitlement is a guaranty amount, not a loan limit
VA does not lend you money. It guarantees a portion of a private lender’s loan, and entitlement is the size of that guaranty. VA’s own entitlement and loan limits page lays out two layers.
Basic entitlement is the $36,000 figure printed on your Certificate of Eligibility, and it applies to loans of $144,000 or less. Nothing in the Richmond market costs $144,000, so basic entitlement is mostly a historical artifact you will see on the paperwork.
Bonus entitlement is the layer that matters. With full entitlement, the bonus generally covers 25 percent of whatever a lender is willing to lend, with no county cap. That is why a veteran with full entitlement can buy at the Chesterfield County median with nothing down and no loan limit in the way.
Full entitlement is not unlimited. VA is explicit that the lender still approves you on credit, income, debts and assets, and that the loan is capped at the lower of appraised value or purchase price. VA sets no minimum credit score; lenders do, and we cover where those overlays land in our guide to the credit score you need to buy in Richmond.
Remaining entitlement after a prior VA loan, worked out
This is the case that confuses people: you used a VA loan before, you still own that house, and you want to buy again. Your entitlement is partly used, so the calculation switches to the county one-unit limit. VA’s published method, using VA’s own illustrative numbers:
Entitlement already charged on the prior loan: $50,000
County one-unit limit: $900,000
Step 1: $900,000 x 0.25 = $225,000
Step 2: $225,000 minus $50,000 = $175,000 remaining bonus entitlement
Step 3: $175,000 x 4 = $700,000 maximum loan with no down payment
Two practical notes. The one-unit limit changes annually and is not a number to look up in a blog post; your lender pulls the current figure for the county you are buying in, and the arithmetic above is only as good as that input. And if remaining entitlement does not cover 25 percent of the loan you want, most lenders will let you close the gap with a down payment. Entitlement and cash are interchangeable here.
If a sale pays off the prior VA loan, entitlement is restored and the exercise disappears, which is why sequencing matters so much for repeat VA buyers. Our preferred lenders can pull a Certificate of Eligibility and tell you which bucket you are in before you write anything.
The funding fee, in dollars rather than percentages
The funding fee is the one time charge that replaces mortgage insurance on a VA loan. The rates below are VA’s published charts, effective April 7, 2023, from the VA funding fee and closing costs page.
| Loan type | Down payment | First use | After first use |
|---|---|---|---|
| Purchase or construction | Less than 5% | 2.15% | 3.3% |
| Purchase or construction | 5% or more | 1.5% | 1.5% |
| Purchase or construction | 10% or more | 1.25% | 1.25% |
| Cash-out refinance | Not a factor | 2.15% | 3.3% |
| Interest Rate Reduction Refinance Loan | Not a factor | 0.5% | 0.5% |
| Loan assumption | Not a factor | 0.5% | 0.5% |
The fee is calculated on the loan amount, not the purchase price. That distinction is worth real money. Against the August 2026 Richmond Metro median of $450,000:
Zero down, first use: $450,000 x 2.15% = $9,675
Zero down, subsequent use: $450,000 x 3.3% = $14,850
5 percent down ($22,500), loan $427,500 x 1.5% = $6,412.50
10 percent down ($45,000), loan $405,000 x 1.25% = $5,062.50
Put $22,500 down and the fee falls by $3,262.50 on a first use loan, a return most people miss while focused on the down payment alone. The same logic in reverse makes the subsequent-use, zero-down case the expensive one: $14,850 added to the balance and financed for thirty years.
Who pays no funding fee at all
VA lists the exemptions plainly. You owe no funding fee if you are receiving VA compensation for a service-connected disability; if you are eligible for that compensation but receiving retirement or active-duty pay instead; if you are a surviving spouse receiving Dependency and Indemnity Compensation; if you received a proposed or memorandum rating before the loan closing date under a pre-discharge claim; or if you are an active-duty service member who provides evidence of a Purple Heart on or before closing.
There is also a refund path. If you are later awarded service-connected compensation effective retroactive to before your closing date, the fee can be refunded. A rating issued after closing does not qualify. On a $14,850 fee, that is worth a call to your regional loan center.
No down payment, no monthly mortgage insurance
The funding fee exists because there is no monthly mortgage insurance on a VA loan. On a conventional loan at 3 percent down, private mortgage insurance is a recurring charge until you hit the cancellation threshold and request it in writing, as we describe in our guide to private mortgage insurance in Richmond. On a VA loan there is nothing to cancel, so the real comparison is a financed one time fee against a stream of monthly premiums. Our breakdown of what down payment you actually need in Richmond puts the three paths side by side.
One limit worth knowing before you write: on a purchase loan, the funding fee is the only cost you can roll into the loan. VA is explicit that every other fee and charge is paid at closing.
The appraisal, the reasonable value and the escape clause
A VA appraisal does two jobs, and conflating them causes most of the trouble. It establishes reasonable value, and it checks the house against VA’s Minimum Property Requirements. The appraiser is assigned through VA’s appraiser and Staff Appraisal Reviewer program, not chosen by the lender.
Minimum Property Requirements are a habitability screen, not an inspection. The appraiser looks for conditions that make a house unsafe, unsound or unsanitary: roofing at the end of its life, exposed wiring, non-functioning heat, standing water in a crawl space, wood destroying insect damage, no safe access. A VA appraiser does not scope the sewer line or test radon. Those are separate and still worth buying, as we listed in what a Richmond home inspector will not cover.
If the reasonable value lands under the contract price, the VA escape clause governs what happens next. VA publishes the required contract language on its escape clause page, quoting 38 CFR 36.4303(k)(4): the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise be obligated to complete the purchase if the contract price exceeds the reasonable value established by VA, but the purchaser retains the privilege and option of proceeding anyway.
Read as a seller, that is a buyer who can walk with the deposit intact. Read as a buyer, it is permission to stay in and cover the gap in cash. The loan is capped at the lower figure; the contract price is not. Three moves exist: renegotiate, pay the difference, or terminate.
| Area | Median sold price | YoY | Closed sales | Median days on market | Months supply |
|---|---|---|---|---|---|
| Richmond Metro | $450,000 | +3.7% | 871 | 22 | 1.8 |
| Chesterfield County | $453,975 | +0.9% | 372 | 22 | 1.9 |
| Entire MLS | $430,000 | +5.0% | 1,302 | 28 | 2.4 |
| [DATA NEEDED: median price per square foot, August 2026, by area] | |||||
Writing a VA offer this month? We keep a Richmond closing timeline checklist that maps the VA specific dates onto a normal Virginia contract: when the Certificate of Eligibility has to be in hand, when the appraisal is ordered, when the Notice of Value lands, and the points where the escape clause and a repair demand collide with the financing contingency. Ask us for the Richmond closing timeline checklist and we will send it.
Four things listing agents get wrong about VA buyers
Myth: a VA buyer is a weaker buyer
A zero down VA buyer is not a buyer without money. Entitlement is a federal guaranty behind 25 percent of the loan, a deeper cushion than the 3 percent equity behind a minimum down payment conventional loan. The seller’s real risk is whether the loan closes, and that underwriting is the lender’s. Ask for the preapproval and read it, as you should with every offer.
Myth: the seller has to pay all the buyer’s closing costs
The most persistent myth, and simply not the rule. VA states that buyer and seller negotiate who pays commission, origination, points, credit report, appraisal, hazard insurance, taxes, title insurance and recording. What VA caps is seller concessions, at no more than 4 percent of the home’s reasonable value. Credits toward closing costs are not themselves limited; concessions, meaning things of value added at no cost to the buyer such as paying the funding fee, retiring the buyer’s debt or prepaying hazard insurance, are what run against the 4 percent ceiling.
Myth: VA appraisals always come in low
A VA appraiser forms an opinion of reasonable value from the same market data anyone else uses. What differs is the escape clause behind it, which makes a low number visible and consequential instead of quietly absorbed. The number is not lower; the consequence is louder.
Myth: the house has to be perfect
Minimum Property Requirements are a floor, not a standard of finish. Dated kitchens, old carpet and cosmetic wear are all fine. What fails is a roof at the end of its life, no functioning heat source, or an unsafe electrical panel. A seller who will not fix a genuinely unsafe condition will have that same conversation with the next buyer’s lender.
What to do with all of this
Buyers: pull the Certificate of Eligibility before you shop, decide whether a partial down payment to drop a funding fee tier is worth the cash, and do not treat the appraisal as a formality. Sellers: evaluate a VA offer the way you would any financed offer, then read the 4 percent concession cap before you counter. To see what the money buys, start with our Richmond area property search or tell us what you are hunting for on our buyer page.
The financing side of this is only half the picture. The other half, what happens when you put a lump sum against a loan you already have, is in our companion piece on recasting versus refinancing a Richmond mortgage. And if you want the dates in order before you write, ask us for the Richmond closing timeline checklist described above; it is the one thing that keeps a VA contract from losing a week to a Notice of Value nobody was watching for.
VA loan questions we get from Richmond buyers and sellers
The funding fee can be financed. What does that actually cost over thirty years?
More than the sticker. Take the $9,675 first-use fee on a $450,000 zero down purchase and roll it into the loan at 6.5 percent over 360 months. It adds roughly $61.15 a month, and 360 payments of $61.15 is about $22,014. Paying the fee in cash at closing, if you have it, is one of the few free wins in this program.
Is there a minimum credit score for a VA loan?
Not from VA. VA states on its own entitlement page that it does not require a minimum credit score, but that some lenders do, and it advises borrowers to contact more than one lender to compare. Two lenders looking at the same file can land differently on score, on debt to income and on residual income, which is a VA specific underwriting test with no conventional equivalent.
Can I use a VA loan for a second home or a rental property?
No. VA financing is for a home you will occupy. If you keep a VA financed home as a rental, that entitlement stays charged until the loan is paid off, which normally means selling or refinancing out of it. You may still buy again on remaining bonus entitlement, the calculation shown above, but the new purchase has to be the one you live in.
What is a Notice of Value and why does it matter to the seller?
It is the document your lender provides showing the reasonable value VA established for the property. It matters to sellers for a reason most never hear: the 4 percent cap on seller concessions is measured against reasonable value from that notice, not against contract price. If value comes in below price, the concession ceiling drops with it.
Do I pay a funding fee every time I do an IRRRL?
Yes, unless you are exempt. The Interest Rate Reduction Refinance Loan carries a 0.5 percent funding fee and it applies each time. On a $400,000 balance that is $2,000 per refinance. Two IRRRLs chasing a falling rate is $4,000 in fees before any lender or title charge, which is why the break even test matters as much here as on any other loan.
Who orders the VA appraisal and who pays for it?
The lender orders it, but the appraiser comes from VA’s panel rather than the lender’s list. The appraisal fee is one of the closing costs VA lists as negotiable between buyer and seller, alongside origination, credit report, title insurance, recording and hazard insurance. In practice the buyer pays it, and in practice it is negotiable.
