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If the price of higher education is giving you sticker shock, you’re not alone.

The average cost of tuition for 2023-24 was $26,027 for in-state residents at public colleges, and $27,091 for out-of-state students. At private colleges, the average tuition and fees totaled a whopping $38,768!

Most students end up taking out student loans to cover the cost of college. Over 43 million Americans have federal student loan debt, with an average balance of $37,718 each. Combined, Americans now hold $1.766 trillion in student loan debt!

Paying off your loan may become a burden, especially if you opt for a career in public service, art, or another low-paying field. Your debt may also become unmanageable if you run into unexpected economic difficulties due to medical bills, losing your job, caring for a parent or child, or other challenges.

If more traditional student loan repayment plans aren’t working, you may want to think outside the box. One approach could be crowdfunding student loans. Here are some things to know about this creative way to tackle your debt.

What Is Crowdfunding

Crowdfunding is the process of soliciting small contributions from multiple donors to meet a financial goal. Through online platforms like Kickstarter and GoFundMe, people have turned to crowdfunding to raise money for entrepreneurial ventures, medical crises, disaster victims, classroom supplies, and much more.

You can solicit donations from friends, family, and even complete strangers. By splitting the contributions among a large quantity of people, crowdfunding is a way to meet a big financial goal while not having to rely on finding one major source of funding.

Raising money online makes it easy to share your campaign widely and for people to easily contribute. Increasingly, people have been crowdfunding to pay off their debt, including fundraising for college. That can include textbooks, tuition, studying abroad, or living expenses — or, of course, student loans.


💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Sites for Crowdfunding Your Student Loan Repayment

There are a number of sites that allow you to set up a crowdfunding campaign so you can pay off your student loans. Before you sign up, you’ll want to make sure that you understand all the rules and fees that you might encounter during the process.

Here are some crowdfunding sites to look into:

GoFundMe: GoFundMe is perhaps the best-known crowdfunding platform out there. Setting up a fundraiser is easy. Once you have a GoFundMe account and set a goal, you’re encouraged to tell your personal story of why you’re raising money and add a photo or video. Then you can share the campaign with your network of family, friends, coworkers, followers on social media, etc. Once your GoFundMe page starts raising money, you can start withdrawing it. While GoFundMe doesn’t charge fees for setting up a page, there are transaction fees (2.9% + $0.30, which includes debit and credit charges).

Rally.org: Rally.org works a lot like GoFundMe. Once you have an account, you can set a goal, tell your story, and then start sharing with friends and family. Like GoFundMe, you can start withdrawing money as soon as people start donating to your fundraiser. There’s one big difference between Rally.org and GoFundMe: the fees. While there’s only transaction fees on GoFundMe fundraisers, Rally.org charges 5% + credit card fees (2.9% + 30 cents) for each donation processed. That 5% can make it harder for you to reach your fundraising goal.

Gift of College: If you’re not looking to launch a full-blown crowdfunding campaign, but you do want to make it easier for friends or family to help you pay off your student loans in the form of gifts at birthdays, holidays, or graduation, you might consider an account with Gift of College. To get started, you set up an account and link your student loan account. Then you can share your profile with friends and family to encourage them to buy you Gift of College gift cards for special occasions. It’s free to set up a Gift of College account, but there is a 5% processing/service fee charged to the gift giver for every gift card they buy (though the fee is capped at $15 per transaction). Gift of College can also be attached to 529 accounts.

Is Crowdfunding for Repaying Student Loans a Good Idea?

There are pros and cons to turning to the crowdfunding model as a way of making a dent in your student loan debt. Let’s start with the positives. If your campaign is successful, it’s an easy way to earn money to pay off your debt, and you don’t have to do much in return. Earning and saving the same amount through a job would likely take much longer, depending on your living expenses.

Similar to a wedding registry, a crowdfunding site also makes it less awkward to ask people in your life for help, compared to just asking for money outright. You probably have lots of loved ones who would like to help you but don’t have an easy way to do it.

Another perk is that obtaining a lump sum and putting it toward your loan principal can greatly reduce the interest that accumulates and the amount you owe over the life of the loan. Finally, crowdfunding often works. There are many examples of successful campaigns out there to inspire you.

There are some downsides to consider. One is that a crowdfunding effort is likely to get you a chunk of money once, rather than a regular stream of funding.

Considering the size of most student loans, and how interest compounds over time, you may not raise enough money to pay off the entire loan. So you’ll still have to figure out a way to consistently make your monthly payments.

Also, how much you may earn is unpredictable — it depends on the strength of your campaign and the size of your network, plus the generosity of donors, so it’s a bit risky to rely on this to stay solvent.

Another con is that depending on the size of the donation, you may need to pay taxes on the money, so you wouldn’t get to keep the entire amount you raise. Finally, even though a specialized crowdfunding site makes it easier, it may still feel uncomfortable to ask people you know for money, especially if they are facing their own debts and financial challenges.

How To Set Up a Crowdfunding Campaign

Pick a crowdfunding platform: First, you need to pick a crowdfunding site to use. Review the terms carefully so you understand how the process works. You’ll want to see if the platform keeps a percentage of funds donated, what processing fees are charged, whether it allows employers or the general public to contribute, and whether the money goes to your lender directly or comes to you in the form of cash.

Set a goal: If your fundraising goal sounds impossibly high, it could prevent some people from donating. Starting with a number that’s ambitious but reasonable may help, even if it means asking for less than your total student loan amount.

Build trust with your funders: You need to spell out what you are going to do with the money. Potential donors likely want to know what, exactly, their gift is supporting. And they probably want to be sure it will actually go toward student loans and not other expenses. Make clear how exactly you will pay off the loan and how you will hold yourself accountable to donors can go a long way toward building trust.

Telling your personal story: People may be more likely to support you if they understand the impact they can have on your life. Telling your unique story can help make their gift about more than just debt. You could describe your past accomplishments and future goals, as well as how the support will help you achieve them. Try putting up photos and a video to help people connect with your goals emotionally.

Leveraging your network: In order to have a successful campaign you’ll need to share with people you know through email and social media. You might want to tie the campaign to a special occasion, such as your birthday or graduation. You can ask your network to share on their channels as well.

Keeping the momentum going: A successful campaign doesn’t end when you launch. Posting updates on your crowdfunding page regularly will keep people interested and remind them to donate could help you reach your goal.

Express gratitude: People are doing you a favor when you donate, so thank them early and often! It will make them feel good about their gifts and perhaps even encourage them to share your campaign or donate more down the line.

Thinking About Student Loan Refinancing

If you can fund your student loan debt in full through crowdfunding, congratulations! But most people can’t depend on this as a long-term strategy and will need to find additional ways to pay off the rest of their balance.

If you’re still struggling with student debt, refinancing your student loans may be another way to make your loans more affordable. You can refinance federal loans, private loans, or a mix of both by taking out a new loan with a private lender like SoFi and using it to pay off your old ones. Note that if you do refinance federal loans with a private lender, you will lose eligibility for federal student loan benefits like deferment and income-driven repayment programs.

You may be able to qualify for a lower interest rate or lower monthly payments, depending on your credit history and income. It could be worth checking what rates you’d qualify for by applying for pre-qualification online. If you refinance with SoFi, membership includes complimentary support from career coaches and protection during periods of unemployment for those who qualify. Plus there are no hidden fees.

The Takeaway

With student debt growing exponentially, it’s worth considering creative solutions. Crowdfunding can be a relatively easy way to make a dent in your student loans without investing a lot of time. But for most people, it won’t be enough to eliminate their debt completely.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

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SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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If you’re struggling to keep up with student loan payments, rest assured you are not alone.

There are many reasons why you may be having difficulty with your loans. Some students may struggle to find a job after graduation or some may not earn as much as they anticipated right out of the gate. For those with federal student loans, forbearance and deferment options exist for these very reasons.

When Student Loan Payments Become Too Much

When monthly student loan payments become insurmountable, the worst thing to do is nothing at all. When a borrower stops paying their student loans, they may go into default. This has the potential to devastate an individual’s credit score.

In default, borrowers could also face relentless collection agencies or could even have their wages garnished. Plus, in most cases, student loans can’t be discharged even if the borrower files for bankruptcy.

There is a temporary exception, however. The Biden administration instituted an “on-ramp” period to protect financially vulnerable borrowers from the consequences of missing payments following the pandemic-era federal payment pause that ended in October. From Oct. 1, 2023 to Sept. 30, 2024, borrowers who miss their student loan payments will not have those missed payments reported to the credit bureaus or referred to collections agencies. Their loans will also not be considered delinquent or in default.

Once the on-ramp period is over, however, the usual repercussions for missing payments will be back in place. Even so, borrowers with federal student loans may have other options for pausing or temporarily reducing their monthly payments if they’ve found themselves in a tough financial spot. Namely, borrowers can apply for either student loan deferment or forbearance from the federal government in order to avoid default.

It can be tough to figure out the difference between these two programs and which is best for your situation. Here’s a breakdown of the differences between student loan deferment and forbearance.


💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

What Is The Difference Between Deferment and Forbearance?

Let’s start with the similarities: Both deferment and forbearance allow a borrower to temporarily lower or stop making payments on their federal student loans for a defined period of time, if they qualify. In both cases, the borrower needs to contact their loan servicer, submit a request, and provide the documentation requested by the loan servicer.

The main difference between the two is that, while in deferment, borrowers are not required to pay the interest that accrues if they have a qualifying loan.

Specifically, interest is not owed on Direct Subsidized Loans, Subsidized Federal Stafford Loans, Federal Perkins Loans, and subsidized portions of Direct Consolidation Loans or Federal Family Education Loan Program (FFEL) Consolidation Loans.

Interest payments are still required on Direct Unsubsidized Loans, Unsubsidized Federal Stafford Loans, Direct PLUS Loans, FFEL Plus Loans, and unsubsidized portions of Direct Consolidation Loans and FFEL Consolidation Loans.

With federal student loan forbearance, borrowers are always responsible for paying the interest that accrues, regardless of what kinds of federal loans they have.

You can either pay the interest as it adds up during the forbearance period, or you can have it added to your interest balance at the end.

Who Is Eligible for Deferment?

Deferment is tailored to people who are facing financial difficulties. Loans can be deferred for up to three years.
To qualify, you need to be enrolled in school at least half-time, in the military, in another eligible post-graduate role, or unable to find a full-time job. You may also qualify for a deferment if you’re seeking cancer treatments, are enrolled in an approved rehabilitation program, or are serving in the Peace Corps.

If a borrower is enrolled in an approved graduate program, they may be able to defer their loans for an additional six months after enrollment ends.

Recommended: Examining How Student Loan Deferment Works

Who Is Eligible for Forbearance?

The two types of forbearance are mandatory and general. Mandatory forbearance must be granted if you qualify, while general forbearance is up to your loan servicer to approve you or not.

Mandatory Forbearance

Loan servicers are required to grant mandatory forbearance to qualifying borrowers. Depending on the type of federal student loan, borrowers may be eligible if they are in a medical or dental internship or residency, serving in AmeriCorps or the National Guard, or working as a teacher and performing a teaching service that qualifies for teacher loan forgiveness.

Borrowers may also qualify if their monthly student loan payment is at least 20% of their gross monthly income. Again, this will depend on the type of loan they have. Note: Mandatory forbearance is granted for up to a year at a time. If you’re still facing financial challenges when the forbearance period ends, you can request another, up to a cumulative total of three years.

General Forbearance

With general forbearance, it’s up to the loan servicer to decide whether to grant it and only certain federal student loans are eligible (Direct Loans, FFEL, and Perkins Loans). Like mandatory forbearance, general forbearance can only be granted for 12 months at a time. There is a three-year cumulative limit on general forbearances.

Borrowers can apply for a general forbearance if they’re unable to make loan payments because of financial hardship, medical bills, or changes in their job (such as reduced pay or unemployment). If there are other reasons they’re unable to pay, it’s also possible to make that case to the loan servicer, but the decision will be theirs to make.

Forbearance vs. Deferment for Student Loans: Which Option to Choose?

If your federal student loan type and circumstances allow you to, it’s best to apply for deferment since it allows you to get a break on interest during the deferment period. However, if you’ve already exhausted the maximum time for a deferment or your situation doesn’t fit the narrow eligibility criteria, then it could make sense to apply for a forbearance.

If your ability to afford your loan payments is unlikely to change anytime soon, or if you have private loans and/or federal loans that don’t qualify for a deferment or forbearance program, you may want to consider other solutions, such as an income-driven repayment plan or student loan refinancing.

How Does an Income-Driven Repayment Plan Work?

Another way to potentially reduce your federal student loan payment is to apply for an income-driven repayment plan. The government offers four different income-driven plans—including the newest plan, Saving on a Valuable Education (SAVE)—which cap the borrower’s monthly payments at a small percentage of their discretionary income.

The plan a borrower qualifies for depends on the type of loan they have and when it was borrowed. Depending on the plan, your monthly payment will generally be reduced to 10-20% of your discretionary income (or as low as 5% starting in July 2024 for certain SAVE plan participants). The repayment term is also extended up to 25 years. If you still have a balance once the repayment period is up, the remaining debt is forgiven. However, you may have to pay taxes on the canceled debt.

How Can Student Loan Refinancing Help?

For some borrowers, refinancing student loans can be an option that helps them reduce their monthly payment or lower their interest rate. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.) Refinancing involves taking out a new loan from a private lender and using it to pay off existing federal or private loans, effectively combining multiple loans into one.

The new loan will have a new term and interest rate, which has the potential to help borrowers save on interest or the amount they pay over the life of the loan. Borrowers with a solid credit score and employment history (among other positive financial indicators) are especially likely to be able to qualify for favorable terms.

Keep in mind that if you refinance federal loans, you will no longer qualify for the federal benefits we discussed in this post, including deferment, forbearance, or income-driven repayment programs. Make sure to weigh the pros and cons of refinancing carefully before moving forward.

However, some private lenders do offer temporary relief if you experience financial hardship. Rather than stopgaps that can require you to reapply year after year, refinancing can help you gain a long-term plan for getting your payments under control.

With SoFi, it’s possible to refinance loans without paying any hidden fees or penalties at either a fixed or variable interest rate.

The Takeaway

Deferment and forbearance are both options that allow borrowers to temporarily pause payments on their federal student loans.

Deferment differs from forbearance in that some borrowers may not be required to pay interest that accrues during deferment, depending on the type of loan they have. With forbearance, borrowers are generally required to cover interest that accrues while the loan is in forbearance.

Borrowers who anticipate having trouble making monthly federal student loan payments in the long-term might consider applying for income-driven repayment plans, which ties monthly payments to the borrower’s income level.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

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SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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A VA (Veterans Affairs) home mortgage loan offers qualified people with a military background the opportunity to get financing to buy a home.

Who qualifies for a VA loan? There are several requirements individuals generally need to meet to qualify for a VA loan. These include a history of military service, passing a credit check, and receiving a Certificate of Eligibility. They must also plan on using the home as their primary residence.

What Is the VA Home Loan Program?

If you’re wondering, what is a VA loan?, here’s what you need to know: The VA Home Loan Program aims to increase access to home mortgages to people who have served in the military. The U.S. Department of Veterans Affairs created the program for qualified veterans, active-duty service members, and some surviving spouses.

The VA pays a percentage of the loans, lowering risk for lenders so they can offer better rates and terms.

This program not only assists veterans in achieving their dream of homeownership, but also promotes stability and financial security for those who have served their country. Whether purchasing a first home or doing a mortgage refinance, eligible veterans and their families can take advantage of this opportunity to enjoy affordable and accessible financing.


💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

Pros and Cons of a VA Home Mortgage Loan

As is the case with many different types of mortgage loans, VA home mortgage loans have benefits and disadvantages borrowers should be aware of before applying. These include:

Pros

•   No down payment: One of the main advantages of VA loans is that they don’t require a down payment.

•   Lower interest rates: VA loans often have lower interest rates than other types of mortgage loans.

•   No private mortgage insurance (PMI): With conventional loans, if you make a down payment that’s less than 20% of the purchase price of the home, you may have to buy PMI. With a VA loan, there’s no PMI requirement which can help buyers, especially first-time homebuyers, save money.

•   Flexible credit standards: VA loans typically have less stringent credit requirements than other types of loans. Borrowers can even qualify after a foreclosure or bankruptcy under certain conditions.

•   Streamlined refinancing: The VA has a refinancing program called the Interest Rate Reduction Refinance Loan (IRRRL).

•   Lifetime benefit: Veterans can use the program at any time.

Cons

•   Funding fee: VA loans come with a one-time financing charge that helps taxpayers cover the costs of the loan program. The amount of the fee depends on the size of the down payment, the type of military service performed, and other factors. Certain veterans, including those who are disabled, do not have to pay the fee.

•   Limited to primary residences: VA loans can only be used to buy a first home or primary residence, they can’t be used to buy a second home or investment property.

•   Potential seller limitations: Not all sellers or agents understand the VA loan program or want to work with VA loan borrowers. This may make negotiations harder and limit which houses can be purchased.

•   Additional property requirements: There are special criteria that properties must meet to ensure they are physically sound, clean, and secure.

•   VA loan limits: There are lending limits that determine the maximum loan amount the VA will guarantee. These may differ depending on the state and county.

Recommended: Cost of Living By State

What Are the Eligibility Requirements for VA Home Loan Programs?

Who qualifies for a VA home loan? The Department of Veterans Affairs sets the eligibility requirements for VA home loan applicants. Generally, to qualify for a mortgage in this case, borrowers must meet prerequisites such as proving their military service history, receiving a Certificate of Eligibility, and passing a credit check. Eligibility requirements are different depending on the type of service performed.


💡 Quick Tip: A VA loan can make home-buying simple for qualified borrowers. Because the VA guarantees a portion of the loan, you could skip a down payment. Plus, you could qualify for lower interest rates, enjoy lower closing costs, and even bypass mortgage insurance.†

Minimum Active-Duty Service Requirements

The VA loan eligibility requirements differ depending on the type of military service performed, as follows.

Service Members

Active-duty service members are eligible for the VA loan program, but may have different requirements than veterans. Service members must have served for at least 90 days continuously in order to meet the minimum active-duty service requirement.

Veterans

Veterans will meet the minimum active-duty service requirement if they served for one of the following:

•   At least 24 continuous months

•   The full period (at least 90 days) of active duty

•   At least 90 days if discharged for a hardship, or a reduction in force

•   Less than 90 days if discharged for a service-connected disability

National Guard Members

National Guard members must have served on active duty for a minimum of 90 days straight

Reserve Members

Generally, reserve members are required to have served on active duty for a minimum of 90 days straight during wartime. Or they may qualify if they have served for more than six years.

How to Request a Certificate of Eligibility (COE)

There are several steps you’ll need to take to get a Certificate of Eligibility. Here’s how to do it.

1.    First, check your eligibility with the VA. Your military service record will need to show that you served for a certain amount of time as indicated above.

2.   Next, provide other documents and information, including your Social Security number, proof of service such as dates of service and discharge papers, and a marriage and death certificate for surviving spouses.

3.   Apply for a certificate on the VA’s eBenefits online portal. You can also request a COE through a VA-approved lender.

Recommended: Home Loan Help Center

What If You Don’t Meet the Minimum Service Requirements?

There are alternative mortgage loan programs you can apply for if you don’t meet the minimum service requirements for a VA loan. These options include:

•   Federal Housing Administration (FHA) loans. These may have more lenient credit score criteria than VA loans and could be a good choice for first time homebuyers.

•   Conventional loans provided by private lenders, such as banks, credit unions, and online lenders. You may need a higher credit score to qualify for these loans.

•   State and city homebuyer aid programs and grants that provide support for down payments, closing costs, and other types of support.

You may also want to consider strengthening your credit score and saving up money for a downpayment in order to qualify for a loan in the future.

The Takeaway

The VA loan program is designed to help eligible veterans, active-duty service members, and surviving spouses qualify for a home loan. Key benefits of the program include no down payment required, low interest rates, and flexible credit requirements.

If you’re looking to take out a mortgage to buy a home or to refinance your current mortgage, there are other loan options you can consider as well.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Who are eligible borrowers on a VA loan?

Eligible borrowers on a VA loan include veterans, active-duty service members, and some surviving spouses. Eligibility depends on length of service performed and the type of home being purchased, among other factors.

What is the major criteria for a VA mortgage?

The major criteria for a VA loan is the individual’s type and duration of military service and their creditworthiness. Also, the applicant needs to show that they have enough income to meet the monthly mortgage payments.

How long do you have to serve in the military to get VA benefits?

Service duration requirements for VA benefits depend on the type of service, but generally one must have served for at least 90 days in a row. For certain situations such as service during wartime, the 90-day requirement may be reduced to as little as 30 days of consecutive military service to be eligible for VA benefits.

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Photo credit: iStock/CatLane

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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If you’re a qualifying veteran, active military service member, or surviving spouse, a VA loan can be an incredible boon on your homeownership journey: It unlocks the opportunity to buy a house with zero down payment required, limited closing costs, competitively low interest rates, and no private mortgage insurance (PMI). What’s more, those who are eligible can take advantage of this benefit as many times as they like. There’s no limit to how many times you can use a VA home loan.

Here’s a closer look at this special and valuable option available to U.S. veterans and their families.

What Is a VA Loan?

Before we dive into how many times can you use a VA loan, let’s start with defining what a VA loan is in the first place.

VA loans are a type of mortgage that are offered by private banks, but backed by the U.S. Department of Veterans Affairs (VA). Because this type of loan is less risky for lenders, banks are able to offer much more favorable terms, including the ability to buy a home without making a down payment.

That means VA loans lower the barrier to entry for all buyers, but especially for first-time homebuyers, who usually find that saving up enough money for a down payment is one of the biggest challenges when it comes to breaking into property ownership. Even better, the cost of your mortgage won’t be inflated by PMI, which most lenders and mortgage programs require whenever a buyer puts less than 20% down. (You will most likely pay a one-time funding fee; more on that later.) There are other special advantages of a VA loan, so if you are considering one, take the time to learn all the ins and outs of how a VA loan works.

Recommended: The Cost of Living by State

How Many Times Can You Take Out a VA Loan?

It almost sounds too good to be true, but it’s not: You can take out a VA loan as many times as you like — as long as you’re eligible for one and you still have remaining entitlement, which we’ll get to in a moment.

In order to apply for a VA loan, you’ll need to first acquire a Certificate of Eligibility, or COE, from the VA. Specific requirements vary depending on which branch of the military you served in, when you served, and a few other factors. (Full details are available directly from the VA.)

How Many VA Loans Can You Have?

There’s no specific limit on how many VA loans you can take out. Some veterans have taken out two, three, or even eight or more! These are typically sequential loans. You wouldn’t be able to use a VA loan to purchase a second home or vacation home, as VA loans are for primary residences (the one exception to this rule is active-duty members who have received a permanent change of service, or PCS, which we will discuss below).

There is one important factor that can, in some instances, limit an eligible veteran or service member’s ability to take out a new VA loan: entitlement.

💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

What Is a VA Loan Entitlement?

As noted above, VA home mortgage loans are backed by the VA. Essentially, the VA promises to pay the bank a certain dollar amount if the borrower — that’s you, the veteran — defaults on the mortgage. That dollar amount is known as your entitlement.

The entitlement is the amount the VA guarantees your lender they’ll receive if you stop paying your loan. Basic entitlement is $36,000, but these days, that’s a very small fraction of most home loans — which is why the VA also offers bonus entitlement, which guarantees the lender the VA will repay 25% of a loan amount over $144,000 if you default.

Full Entitlement

If this is your first time using a VA loan, or if you paid off a previous VA loan in full and then sold the house, you have full entitlement — though the total amount of money you can borrow will still be limited by factors that typically determine whether you will qualify for a mortgage, such as your credit history, income, and assets.

Reduced Entitlement

If you already have an active VA loan, paid off a VA loan for a home you still own, refinanced the VA loan you took out on a home you still own, or had a foreclosure and didn’t pay back the VA in full, you may have reduced entitlement.

Reduced entitlement limits the amount the VA will guarantee to your lender in the event that you default. The limit is the conforming loan limit in your area, minus whatever amount of entitlement you’ve already used. If you have reduced entitlement, you may be required to make a down payment.

Calculators are available online to help you determine how much entitlement you have left, but essentially, the equation is this: your maximum entitlement (one quarter of your county’s conforming loan limit) minus the entitlement you’ve used (one quarter of the VA loan you’ve already taken out) equals your remaining entitlement. Here’s the formula:

Conforming loan limit ÷ 4 = maximum entitlement

Existing loan amount ÷ 4 = entitlement you’ve used

Maximum entitlement – entitlement you’ve used = remaining entitlement

Recommended: How Government-Backed Mortgages Work

When You Might Have More Than One VA Loan at a Time

All of this begs the question: Why would you have more than one loan at a time, anyway? One home, one loan, right?

Well, if you’re an active-duty military member, you might receive permanent change of service (PCS) orders, which would require you to move to a new duty station — and therefore find new housing. Under those circumstances, you might have two active VA loans at one time.

Pros and Cons of Taking Out a Second VA Loan

If you’re taking out a second VA loan to fund a home purchase, there are both drawbacks and benefits to consider.

Pros:

•   If your remaining entitlement is high enough, you may still be able to avoid making a down payment

•   You will still benefit from other VA benefits, including competitive low interest rates and easier qualification standards

Cons:

•   If you don’t have enough remaining entitlement, you may still be required to put a down payment on the home — though possibly less of one than you would have otherwise

How to Take Out a Second VA Loan

To take out a second VA loan, you must get approved for the loan by a qualified VA lender. The first step is to determine how much remaining entitlement you have, as this will illuminate how much house you can afford to purchase — and how large of a down payment you’ll be required to make, if any. (Remember, your new home loan must be for a primary residence, so you can’t take out a second VA loan to fund a vacation home or investment property.)

💡 Quick Tip: Backed by the Federal Housing Administration (FHA), FHA loans provide those with a fair credit score the opportunity to buy a home. They’re a great option for first-time homebuyers.

Tips on Taking Out a Second VA Loan

Your lender will give you step-by-step instructions on how to apply for a second VA loan, including which documents and identification you’ll need to supply to prove your income, credit history, and more. Keep in mind that your remaining entitlement will determine how much money you’ll need to put down at closing. If you explore the second VA loan and aren’t sure it is right for your situation, consult a home loan help center to learn about more options.

The Takeaway

How many times can you use a VA home loan? While there’s no limit to how many VA loans you can take out in one lifetime, entitlement does limit how much the VA backs those loans for lenders involved — and could limit your ability to qualify for a no-down-payment VA loan.

SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.

Our Mortgage Loan Officers are ready to guide you through the process step by step.

FAQ

Is there a limit on how many times you can use a VA loan?

No — you can use your VA loan benefit as many times as you would like in your lifetime. However, your entitlement, or the amount of money that the VA pledges to back the loan for the lender, can be reduced if you’ve already taken out a VA loan.

Can a VA loan be used multiple times?

Yes — you can use your VA loan benefit multiple times. Your amount of entitlement can change the qualification process, however. If you have reduced entitlement, you may be required to make a down payment on the new loan.

How soon after using a VA loan can you use it again?

While there’s no specific time limit, VA loans can only be used for primary residences, and your entitlement will likely be reduced if you’re still living in the home you purchased with your original VA loan.

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Photo credit: iStock/LumiNola

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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When comparing different types of mortgages, there are some great reasons to consider a loan from the U.S. Department of Veterans Affairs (VA) if you’re eligible for one. Some of the best VA loan benefits include no down payment requirement, no private mortgage insurance, and the potential to get a lower interest rate.

There are, however, some advantages to getting a conventional loan instead even if you qualify for VA financing. Comparing the benefits of a VA loan vs. a conventional mortgage can help you decide which one might be right for you.

Comparing VA Loans vs. Conventional Loans

If you’re a first-time homebuyer, it’s good to know a little about different types of mortgages and how they work. VA loans and conventional loans can both help you to buy a home, but one might be a better fit than another, depending on your financial situation.

Conventional Loan

A conventional loan is a home mortgage loan that’s not backed by the federal government. Examples of government-backed loans include VA loans and Federal Housing Administration (FHA) loans, which are designed to make buying a home more affordable for first-time buyers. Conventional loans can be conforming, meaning they meet standards set by government entities Fannie Mae or Freddie Mac, or non-conforming.

Conventional loans might be what you automatically think of when discussing mortgage loans. You can get a conventional mortgage from a traditional bank or credit union, but you can also find them offered through online lenders. Conventional mortgages typically require a down payment, which is money you pay upfront to reduce the amount you need to borrow.

VA Loan

What is a VA loan? A VA loan is a loan that’s backed by the federal government. The Department of Veterans Affairs operates the VA loan program to help eligible military members and their surviving spouses purchase affordable housing. Borrowers can get a loan through an approved VA lender to buy a home, build a home, or pursue a mortgage refinance.

If a borrower defaults on a VA loan, the government steps in to help the lender recover some of its losses. This is one of several VA loan benefits. With a conventional loan, the lender can’t call on the government to get any of its money back if the borrower fails to pay what’s owed.

Mortgage Requirements for VA Loans vs Conventional Loans

What are the benefits of a VA loan vs. conventional loan? A lot of the main advantages center around what’s needed to qualify and what you’ll pay as a borrower. Here are some of the main mortgage requirements to know when looking at the benefits of VA loan financing side by side with conventional loans.

Credit Score

Lenders can use your credit score to qualify you for a mortgage and your credit history can also influence the rates you pay for a home loan. One of the main benefits of using a VA loan to buy is that the VA program does not have a minimum credit score requirement. That could make a VA loan attractive for borrowers with less-than-perfect credit.

However, VA-approved lenders may set their own minimum credit score requirements for loans. Of course, lenders can do the same for conventional mortgages. Generally speaking, a good credit score for a mortgage is usually 620 or higher, though the better your score the easier it may be to get approved.

Down Payment

Putting money down on a home reduces the amount you need to borrow and if you’re getting a conventional loan, it may help you to avoid private mortgage insurance (PMI). PMI is insurance that covers the lender in the event that you default on your loan and it’s typically required for conventional loans when you put less than 20% down.

The VA, however, doesn’t require a down payment for loans. That’s one of the nicer VA loan benefits for homebuyers, since you don’t have to part with a large chunk of cash all at once. Instead, you could save your money to buy new furniture, make improvements to your new home, or pad your emergency fund so that you’re prepared in case the roof springs a leak or you need to replace your water heater.

Debt-to-Income Ratio

Your debt-to-income ratio or DTI reflects the amount of your income that goes to debt repayment each month. For conventional home mortgage loans, a good DTI is 36% or less, though it’s possible to find lenders that will work with you if your DTI is above that amount.

With VA loans, it’s possible to get approved with a DTI of up to 41%. However, having a higher DTI could make it more difficult to keep up with your mortgage payments. For that reason, it’s a good idea to work out a detailed home buying budget to determine how much you can afford without straining yourself financially.

Private Mortgage Insurance

As mentioned, private mortgage insurance is a feature that can be included in a conventional mortgage if you put less than 20% down. Premiums are added into your monthly mortgage payment and once your equity reaches 20%, you can request to have PMI removed from your loan. Lenders are supposed to drop PMI automatically once your mortgage balance reaches 78% of the home’s original value, assuming you are up to date on your payments.

One of the benefits of a VA home loan is that you don’t have to worry about any of that. There is no PMI for these loans, so you don’t have to factor in any added costs when estimating how much your monthly mortgage payments will be.

Property Eligibility

VA home loans can be used to purchase a variety of home types, including:

•   Single family homes with up to four units

•   Condos in a VA-approved project

•   Manufactured homes

The VA loan program requires a home inspection and an appraisal to make sure that the home is structurally sound and that its value is compatible with the amount that you want to borrow. If a home has any obvious defects, such as a cracked foundation, you may need to get an additional inspection from a certified engineer in order to move ahead with the loan.

VA loans are designed for purchasing primary homes. In other words, you can only get one for a home you plan to live in. Conventional loans, on the other hand, can be used to purchase a primary home, second home, or investment property. While an appraisal is required for a conventional loan, an inspection may be optional if the lender allows.

Borrower Fees

When you get a conventional loan, you’ll typically pay 2% to 5% of the purchase price in closing costs. Closing costs cover things like attorney’s fees, mailing fees, and recording fees. You’ll need to bring a check to closing or wire the amount to your closing attorney to pay those fees, along with your down payment.

A VA lender can also charge closing costs and borrowers must usually pay a VA funding fee as well. This fee is used to cover the costs of the VA loan program and it’s paid just once. The amount you pay for a VA loan funding fee depends on whether you’re a first time homebuyer or repeat buyer and how much money you put down, if any.

Additional Requirements to Consider

Aside from having a good credit score and steady income, there’s one more thing you’ll need to qualify for a VA loan. Borrowers are expected to produce a Certificate of Eligibility (COE) demonstrating that they’re eligible for the VA loan program.

Veterans, service members and surviving spouses can apply for a COE online through the VA website. To get your COE, you must be able to meet minimum duty and service standards. If you’re currently on active duty, you’ll need to get a statement of service from your commander, adjutant, or personnel officer.

If you don’t meet the service requirements for a COE, you may still be able to qualify if you were discharged. Exceptions are also made for the spouses of veterans and for people who served in certain organizations. However, if you’re not able to meet those requirements then you’ll need to consider another home loan option.

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Pros and Cons of a VA Loan vs a Conventional Loan

The benefits of a VA mortgage loan are undeniable, particularly for first-time buyers who may not have a lot of cash to put toward a down payment. To recap, here are the main VA home loan benefits to know, as well as some of the cons, when comparing them to conventional financing options.

	VA Loans	Conventional Loans
Pros	No down payment requirements. No private mortgage insurance. Potentially lower interest rates.	No VA funding fee. Skip PMI if you can put down 20% or more. Purchase a primary home or investment property.
Cons	VA funding fee is usually required. Appraisal and inspection are required. Properties must be eligible for a loan.	PMI can add to total home-buying costs. Interest rates may be higher. Higher credit score may be required to qualify.

How to Choose the Right Mortgage For You

Weighing the benefits of VA loan financing against conventional loans is important when it comes to choosing the best loan option. If you meet the criteria for a VA loan, then you might consider prequalifying for this type of mortgage first to see what kind of rates and terms you’re eligible for.

On the other hand, if you’re ineligible for a VA loan because you don’t have a COE or you can’t meet a lender’s credit requirements, then a conventional loan might be best. Visit a home loan help center to explore more options.

With any mortgage, it’s helpful to consider:

•   Interest rates and what you might pay

•   Repayment terms

•   Closing costs and other fees

•   Appraisal and inspection requirements

•   Down payment requirements

•   Funding speed

It’s also to your advantage to make yourself as creditworthy as possible before applying for a home loan. Some of the best tips to qualify for a mortgage include paying down existing debts to reduce your debt-to-income ratio, making sure you’re paying all your bills on time, and holding off on applying for other loans or lines of credit.

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The Takeaway

There are several VA home loan benefits. Getting a VA loan could save money if you’re able to get a lower interest rate and avoid making a large down payment. Conventional loans, on the other hand, are still worth a look, especially if you want to buy a second home or an investment property.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What is the advantage of a VA loan vs a conventional loan?

VA loans do not require a down payment or private mortgage insurance. Conventional loans may require a 20% down payment to avoid PMI. VA loans may also have lower interest rates for qualified borrowers.

Are VA rates better than conventional?

VA loans can have lower interest rates than conventional loans, which could save you some money as a homebuyer. The interest rates you’re able to qualify for with a VA loan vs. conventional loan can depend largely on your credit scores and credit history.

Why do sellers prefer conventional over VA?

Home sellers may prefer to sell to buyers who have conventional loan funding simply because VA loans tend to have stricter requirements when it comes to the property itself. Buyers must be able to get the home appraised and inspected in order to move ahead with a VA purchase loan.

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Photo credit: iStock/designer491

^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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