The VA Loan: 2025 Updates, Benefits, and What You Need to Know in El Paso County, Colorado 🇺🇸🏡

For military service members, veterans, and eligible spouses, the VA loan remains one of the most valuable home financing tools, offering zero down payment, no PMI, and competitive interest rates.

With 2025 bringing new changes, including updated loan limits, funding fees, and eligibility considerations, it's important to stay informed. Whether you’re a first-time VA loan user or looking to buy a second home while using remaining entitlement, this guide breaks it all down.

Who Qualifies for a VA Loan?

The VA loan benefit is reserved for:

✅ Active duty service members
✅ Veterans meeting service requirements
✅ National Guard & Reserve members with qualifying service
✅ Eligible surviving spouses of military members

This incredible benefit was designed to honor service members by making homeownership more accessible and affordable.

Top Benefits of a VA Loan

🏡 Zero Down Payment – No need for a 5-20% down payment like conventional loans.
💰 No PMI (Private Mortgage Insurance) – Saves hundreds per month in unnecessary fees.
💲 Competitive Interest Rates – VA loans often have lower interest rates than conventional loans.
🛡 Flexible Credit Requirements – More lenient credit guidelines help borrowers qualify more easily.
🚫 No Loan Limits for Full Entitlement – Eligible borrowers can buy a home at any price with zero down, as long as they qualify based on income and credit.

What’s Changing for VA Loans in 2025?

The VA loan program remains strong, but 2025 brings a few key updates:

🔹 Updated VA Loan Limits for Partial Entitlement – If you have an active VA loan, new limits apply when using your remaining entitlement.
🔹 Higher VA Funding Fees – The VA funding fee has increased slightly for some borrowers who are not exempt (details below).
🔹 Stricter Occupancy Rules – VA loans still require owner-occupancy, but new guidelines clarify timing and exceptions for active-duty relocations.

VA Loan Limits in El Paso County, Colorado (2025)

If you have full VA entitlement, there is NO VA loan limit—you can buy a home at any price with no down payment.

However, if you already have a VA loan tied up in another property, your remaining entitlement is limited by the county loan limit. In El Paso County, Colorado, the 2025 VA loan limit is $766,550.

What If You Already Have a VA Loan on Another Property?

If you still have some VA entitlement left, you can purchase another home using your VA benefits, but a down payment may be required.

How Is VA Loan Entitlement Determined?

The VA guarantees 25% of the loan amount. If part of your entitlement is tied up in another home, your remaining eligibility is calculated as follows:

🔹 Multiply the county loan limit ($766,550) by 25% → $191,637 is the maximum VA guarantee.
🔹 Subtract the entitlement already used on another home.
🔹 If less than 25% of the new home’s price is covered by remaining entitlement, you must make up the difference in a down payment.

How Much Do You Have to Put Down If You Have Only $1 of Entitlement Left?

If you only have $1 of entitlement left, you must cover 25% of the home’s purchase price with a down payment.

📌 Example: Buying a $500,000 home with only $1 of VA entitlement left:
✅ VA requires a 25% guarantee → $125,000 minimum down payment required
✅ VA will still back the remaining portion of the loan

This is still a major advantage over conventional loans, which typically require a higher down payment and PMI.

2025 VA Funding Fees: What to Expect

The VA Funding Fee is a one-time fee applied to VA home loans, helping sustain the program for future veterans. This fee depends on loan type, down payment, and prior VA loan usage.

VA Funding Fee Rates for 2025

1. Purchase and Construction Loans

• First-Time Use:
  • Down Payment Less than 5%: 2.15%
  • Down Payment of 5% or More: 1.5%
  • Down Payment of 10% or More: 1.25%
• After First Use:
  • Down Payment Less than 5%: 3.3%
  • Down Payment of 5% or More: 1.5%
  • Down Payment of 10% or More: 1.25%

2. Cash-Out Refinance Loans

• First-Time Use: 2.15%
• After First Use: 3.3%

3. Interest Rate Reduction Refinance Loans (IRRRLs)

• All Uses: 0.5%

4. Other Loan Types

• Manufactured Home Loans (Not Permanently Affixed): 1.0%
• Loan Assumptions: 0.5%
• Native American Direct Loan (NADL):
  • Purchase: 1.25%
  • Refinance: 0.5%

Who Is Exempt from the VA Funding Fee?

You are exempt from the VA funding fee if:
✅ You receive VA compensation for a service-connected disability.
✅ You are eligible for VA compensation but receive retirement pay instead.
✅ You are a surviving spouse of a Veteran who died in service or from a service-connected disability.
✅ You are an active-duty service member who has been awarded the Purple Heart before closing.

Should You Restore Your VA Loan Entitlement?

If your previous VA loan is paid off or refinanced into a non-VA loan, you can apply to restore your full entitlement. This allows you to purchase a home with zero down again.

📝 Ways to Restore VA Loan Entitlement:
✔ Sell your current VA-financed home & pay off the loan
✔ Refinance your VA loan into a conventional loan
✔ Apply for a one-time entitlement restoration (if keeping the original VA-financed home as an investment property)

Final Thoughts

VA loans continue to be one of the best benefits for military service members and veterans, offering zero down financing, competitive rates, and flexible eligibility options.

If you’re considering using your VA loan benefit in Colorado Springs or El Paso County, understanding the new 2025 changes, loan limits, and partial entitlement options can help you make an informed decision.

📢 Thinking of buying a home with your VA loan? Let’s talk about your options and make sure you’re maximizing this incredible benefit!

Connect with Me:

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• Website: www.NicoleStromRealtor.com
• Phone: 719-922-0102

Let’s make your homeownership dreams a reality with your VA benefits! 🏡 🇺🇸