VA Loan Basics for Buyers in Chico, CA
A VA loan lets eligible veterans, active-duty service members, and some surviving spouses buy a home in Chico with no down payment, no monthly mortgage insurance, and no VA-set loan limit if you have full entitlement. Most borrowers pay a one-time VA funding fee ranging from 0.5% to 3.3% of the loan amount, though many with a service-connected disability rating are exempt. You'll need a Certificate of Eligibility (COE) and the home must meet the VA's Minimum Property Requirements. Funding fee rates are set by federal law and can change, so confirm current percentages with your lender before closing.
What Makes a VA Loan Different From a Conventional Loan?
VA loans are backed by the Department of Veterans Affairs but issued by private lenders. The main differences from a conventional loan are no down payment requirement, no private mortgage insurance regardless of how little you put down, and generally more flexible credit standards. VA loans are also assumable, meaning a future buyer with VA eligibility (or in some cases without) can take over your existing loan and interest rate, which can be a real selling point if rates rise after you buy.
How Much Is the VA Funding Fee?
The funding fee is a one-time charge that replaces monthly mortgage insurance, and current rates have been in effect since April 2023. For a first-time VA loan user with no down payment, the fee is 2.15% of the loan amount. Putting down 5% to 9% drops it to 1.5%, and 10% or more drops it to 1.25%. Subsequent use with no down payment runs 3.3%, though it drops to the same 1.5% or 1.25% tiers with a down payment. The fee can be paid in cash at closing or rolled into the loan. These percentages are set by federal law and are subject to change, so verify the current schedule with your lender.
Who Is Exempt From the VA Funding Fee?
Veterans receiving VA disability compensation at any rating of 10% or higher are generally exempt from the funding fee entirely, as are certain Purple Heart recipients on active duty and some surviving spouses receiving Dependency and Indemnity Compensation (DIC). If your disability rating is approved after you close but the effective date falls before your closing date, you may be able to file for a refund of the fee you already paid.
Do VA Loans Require a Termite Inspection in Chico, CA?
California is one of the states where the VA appraiser routinely requires a wood-destroying pest (termite) inspection as a condition of the loan. Since a 2022 VA policy change, you as the borrower are now allowed to pay for this inspection yourself if you choose, rather than it automatically falling to the seller. Most buyers still negotiate for the seller to cover it, but it is no longer a required seller cost. If the inspection finds active infestation or damage, repairs generally have to be completed before the loan can close.
Chico has a full VA outpatient clinic at 1601 Concord Avenue, part of the VA Northern California Health Care System, offering primary care and mental health services to local veterans. Buyers relocating to the area for VA healthcare access sometimes ask about proximity to this clinic when house hunting.
What Are the VA's Minimum Property Requirements?
The VA requires the home to be safe, sound, and sanitary, which is a lower bar than a full home inspection but still catches things like a malfunctioning water heater, exposed wiring, or a roof with less than a few years of remaining life. The VA appraiser checks for these issues at the same time they determine value, and any required repairs typically need to be completed before closing. A separate, more thorough home inspection is still strongly recommended even though the VA does not require one.
Frequently Asked Questions
Can I use a VA loan more than once?
Yes. VA loan benefits can be used multiple times over your lifetime as long as you have remaining entitlement, and entitlement is restored once a previous VA loan is paid off or the home is sold.
Do I need a down payment for a VA loan in Chico?
No down payment is required for most eligible borrowers, though putting money down can lower your funding fee and your monthly payment.
Is there a maximum VA loan amount?
For veterans with full entitlement, there is no VA-imposed loan limit, though your income and the lender's underwriting standards still determine what you qualify for.
How do I get my Certificate of Eligibility (COE)?
You can request your COE through the VA's eBenefits portal, through your lender, or by mail, and you'll generally need your discharge paperwork (DD-214) or current service documentation.
Kannon Christiansen is a Realtor with Keller Williams Realty Chico Area, serving buyers and sellers throughout Chico and Butte County, CA.
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Contact Information
Kannon Christiansen, REALTOR® - CA DRE# 02443167Keller Williams Realty - Chico Area
Chico, CA 95928
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