By Western Mountain Real Estate
We work with a lot of military families relocating to Colorado Springs, and understanding how a VA loan actually works makes a real difference in how you approach buying here. This is one of the most military-connected regions in the country, and VA loans are used constantly across the market as a result. Here's what we think buyers should know before using this benefit.
Key Takeaways
- Colorado Springs is one of the largest VA loan markets in the country, given its military presence
- VA loans allow $0 down and no monthly mortgage insurance
- The VA funding fee varies based on down payment and whether it's your first time using the benefit
- Full entitlement removes any VA-imposed loan limit, while partial entitlement does not
Why Colorado Springs Is a Major VA Loan Market
Colorado Springs is anchored by Fort Carson, with Peterson Space Force Base, Schriever Space Force Base, Cheyenne Mountain Space Force Station, and the U.S. Air Force Academy all located in the surrounding area. This concentration of military installations makes El Paso County one of the highest-volume VA loan markets in the country. As a result, sellers and agents throughout the region are generally very familiar with VA offers, which can make the process smoother than in markets where this loan type is less common.
What Makes This Market Different
- Fort Carson, Peterson SFB, Schriever SFB, and the Air Force Academy all nearby
- One of the highest-volume VA loan markets in the country
- Sellers and agents here are generally familiar with how VA offers work
- A real advantage compared to markets less accustomed to this loan type
Zero Down, No PMI: The Core VA Benefit
A VA loan allows eligible buyers to purchase a home with no down payment and no monthly private mortgage insurance, which is a meaningful difference from a typical conventional loan. Basic Allowance for Housing counts as qualifying income for VA loan purposes, which can make a real difference in what you qualify for. The VA itself doesn't set a minimum credit score, though individual lenders may still apply their own requirements on top of VA guidelines.
Why This Benefit Matters So Much
- No down payment required for eligible buyers
- No monthly private mortgage insurance, unlike most conventional loans
- BAH counts as qualifying income toward your debt-to-income ratio
- The VA itself sets no minimum credit score, though lenders may still have their own
Understanding the VA Funding Fee
Most VA loans include a funding fee instead of monthly mortgage insurance, and the exact percentage depends on your down payment and whether this is your first time using the benefit. For a first-time use with no down payment, the fee generally runs around 2.15 percent, dropping to lower tiers with a larger down payment, while a second or subsequent use with no down payment runs closer to 3.3 percent. Veterans receiving VA disability compensation at any rating are typically fully exempt from this fee.
What Affects Your Funding Fee
- Whether this is your first use of a VA loan or a subsequent one
- The size of your down payment, if you choose to make one
- A full exemption for veterans receiving VA disability compensation
- The fee can be financed into your loan rather than paid upfront
Full vs. Partial Entitlement and Loan Limits
Veterans with full entitlement have no VA-imposed loan limit, meaning you can buy at essentially any price point with no down payment, subject to lender approval and appraisal. Partial entitlement, which typically applies if you already have an active VA loan on another property, is instead tied to the local conforming loan limit, currently set at $832,750 for El Paso County. Understanding which category you fall into matters significantly for how you approach a home search here.
Why Entitlement Status Matters
- Full entitlement means no VA-imposed cap on purchase price
- Partial entitlement ties your limit to the local conforming loan figure
- El Paso County's current conforming limit is $832,750
- Your Certificate of Eligibility confirms exactly where you stand
A Few Other VA Loan Details Worth Knowing
VA loans generally require the home to be your primary residence, with an expectation that you'll occupy it within 60 days of closing, though PCS timelines can allow some flexibility here. VA loans also allow the purchase of a two-to-four unit property, as long as you occupy one of the units yourself. If you already have a VA loan and rates drop later, the VA's streamlined refinance option typically closes faster and carries a reduced funding fee compared to a first-time purchase loan.
Additional Details Worth Understanding
- A primary residence occupancy requirement, with some PCS-related flexibility
- The option to buy a two-to-four unit property if you occupy one unit
- A streamlined refinance option available if you already have a VA loan
- Details that are worth confirming directly based on your specific situation
FAQs
Do we need a down payment at all with a VA loan?
We'd say not if you don't want to, no. Eligible buyers can purchase with no down payment at all, though putting some money down can lower your funding fee if that makes sense for your situation.
Does our BAH actually help us qualify for a bigger loan?
It can, yes, since BAH counts as real income for VA loan qualifying purposes. We always recommend running the numbers with a lender familiar with military buyers specifically.
Is a VA loan really better than a conventional loan for a primary residence here?
For most active-duty and veteran buyers purchasing a primary residence, yes, we'd say VA is usually the stronger option. Conventional financing tends to make more sense for situations VA doesn't cover, like a second home or investment property.
Contact Western Mountain Real Estate Today
Helping military families navigate a VA purchase in Colorado Springs is something we truly enjoy being part of. We're happy to walk you through what this benefit actually looks like for your specific situation.
Reach out to
Western Mountain Real Estate, and let's talk about using your VA benefit in Colorado Springs.
