Every term, in plain language.

Appraisal (VA)

The VA-ordered valuation of the home, performed by a VA-assigned appraiser. It protects the loan guarantee by confirming value and checking Minimum Property Requirements. It is not a home inspection.

BAH — Basic Allowance for Housing

The monthly housing allowance paid to service members not living in government quarters, set by rank, dependency status, and duty-station ZIP code. Lenders can count it as qualifying income.

BAS — Basic Allowance for Subsistence

The monthly food allowance for service members. Like BAH, it is non-taxable and can count toward qualifying income.

Base pay

The taxable core of a military paycheck, set by pay grade and years of service on a DoD table that updates every January. Allowances like BAH and BAS stack on top of it, tax-free.

COE — Certificate of Eligibility

The VA document proving to a lender that you meet the service requirements for the VA loan. Free to request on VA.gov, and a lender can pull it electronically instead.

Conforming loan limit

The FHFA's annual cap on conventional loans ($832,750 baseline for one-unit homes in 2026). For VA borrowers it only matters with partial entitlement, where it drives the remaining-entitlement math.

DTI — Debt-to-Income ratio

All monthly debt payments (including the new mortgage) divided by gross monthly income. VA guidance centers on 41%, but strong residual income can support a higher ratio.

DIC — Dependency and Indemnity Compensation

A VA benefit paid to eligible survivors of service members who died in service or from a service-connected cause. Receiving DIC is one marker of surviving-spouse eligibility for the VA loan.

Entitlement

The dollar amount the VA will guarantee on your behalf, effectively your reusable benefit. Full entitlement (no active VA loan, nothing lost to a foreclosure) means no loan limit; partial entitlement caps your zero-down amount by county.

Escape clause

A mandatory contract clause letting a VA buyer walk away with their earnest money if the home appraises below the purchase price. The buyer can still choose to pay the difference in cash.

Funding fee

The one-time charge that funds the VA guarantee program. The percentage depends on the transaction and on prior use of the benefit: a purchase with less than 5% down runs 2.15% for first use and 3.30% after, and larger down payments lower both; a cash-out refinance runs 2.15% for first use and 3.30% after; an IRRRL is 0.50% (schedule as of July 10, 2026). Waived entirely for veterans who receive VA disability compensation for a service-connected condition, those eligible for compensation who take military retired pay instead, surviving spouses receiving DIC, and active-duty Purple Heart recipients. A 0% rating is non-compensable and does not qualify on its own. Can be financed into the loan.

Guaranty

The VA's promise to repay the lender a portion (typically 25%) of the loan if the borrower defaults. This is what replaces the down payment and mortgage insurance a conventional loan would demand.

IRRRL — Interest Rate Reduction Refinance Loan

The VA streamline refinance: an existing VA loan replaced by one at a lower interest rate. VA's Lenders Handbook topic on the product carries an internal Change Date of April 10, 2009, predating the 2018 statute behind the recoupment, benefit and seasoning rules; on that topic's words VA generally does not require an appraisal, credit information, or underwriting on one, with named exceptions (a monthly payment rising 20% or more, a delinquent loan being refinanced, and cases that turn on a loan-to-value figure), and a lender may require any of them regardless. Funding fee 0.50%. Its own benefit requirements apply.

LES — Leave and Earnings Statement

The military pay stub. Lenders read it to verify base pay, BAH, BAS, and special pays when qualifying an active-duty borrower.

MPRs — Minimum Property Requirements

The VA's baseline standards for a home's safety, soundness, and sanitation, checked during the VA appraisal. Common trip-ups: peeling paint in pre-1978 homes, missing handrails, inoperable systems.

Net tangible benefit

The benefit a VA refinance has to deliver before VA will guarantee it, defined by statute and regulation rather than by the lender. An IRRRL carries two requirements: a statute under which the lender delivers the borrower a net tangible benefit test and the new rate has to drop by a set minimum, plus a regulation the loan meets by producing any one of a listed set of benefits (a lower principal-and-interest payment, a shorter term, a fixed rate replacing an adjustable one, and others). A cash-out refinance has its own separate test, which the loan meets by producing any one of eight listed factors.

One-time close (construction-to-permanent)

A VA construction loan that closes the construction financing and the permanent mortgage in a single closing, before construction begins. VA's Lenders Handbook topic on construction loans, carrying an internal Change Date of June 5, 2024, states that the loan's final terms are modified to the permanent terms when the build is finished, with no second closing. VA also permits a two-time close, where a non-VA interim construction loan is closed first and a VA-guaranteed loan refinances it once the home is complete. VA classifies both as purchases for its own purposes, and states the limit on that itself: the classification is for VA purposes and may not match Real Estate Settlement Procedures Act requirements, so a closing package using a different word is not necessarily wrong.

Partial entitlement

What you have when part of your entitlement is tied up in an active VA loan or was lost to a foreclosure. You can still buy with zero down, up to a cap: 25% of the county loan limit minus the entitlement already used.

PITI — your full monthly payment

Principal, Interest, Taxes, and Insurance: the four pieces of a real monthly mortgage payment. Ads usually quote only the first two, which is why the real payment is always bigger than the ad.

Escrow

A neutral third party that holds money and paperwork while a sale is in progress, so neither side can run off with anything. Later, the same word describes the account your lender uses to collect taxes and insurance a little each month.

Earnest money

A deposit (often 1% or so of the price) you put down with an offer to show you're serious. It's held by a neutral party and usually counts toward your costs at closing. Back out for a reason your contract allows and you generally get it back.

Preapproval

A lender's written estimate of what they'd lend you, based on checking your income, debts, and credit. It's not a guarantee, but sellers take offers with one far more seriously. Free, and worth getting before you look at homes.

Closing costs

The collection of fees paid on the day the sale completes: lender charges, title work, taxes, prepaid insurance. Often 2 to 5% of the price. On a VA loan, the seller can agree to pay some or all of them for you.

Contingency

An “only if” condition written into your offer: the deal goes through only if the inspection is acceptable, the appraisal supports the price, or your loan is approved. Contingencies are what let you walk away without losing your deposit.

PMI — Private Mortgage Insurance

The monthly insurance conventional borrowers pay when putting less than 20% down. VA loans never carry it; the guaranty replaces it. This is one of the benefit's largest dollar advantages.

Residual income

The cash left over each month after the mortgage, taxes, debts, and estimated living costs. This is the VA's signature underwriting test. Minimums vary by region and household size. Strong residual income is why VA loans default less despite zero down.

Second-tier (bonus) entitlement

The additional entitlement above the basic $36,000 that makes larger loans and second VA loans possible. It is what lets you keep one VA loan (say, a rented home at a prior duty station) and still buy with another.

Service academy

The federal academies whose cadets and midshipmen count as being on active duty by law (38 U.S.C. § 101): the U.S. Military Academy (West Point), U.S. Air Force Academy, and U.S. Coast Guard Academy (cadets), and the U.S. Naval Academy (midshipmen). VA lists them as a home-loan eligibility category.

Statement of service

A letter signed by your commanding officer that lists your name, date you entered active duty, and any lost time. While you are still serving, it takes the place of a DD-214 when a lender requests your Certificate of Eligibility.

Senior Military College (SMC)

One of six colleges where students train in uniform: The Citadel, Virginia Military Institute, Norwich, Texas A&M, Virginia Tech Corps of Cadets, and the University of North Georgia. Unlike the federal service academies, SMC students are typically ROTC and not on active duty, so their college time alone does not establish VA loan eligibility.

Seller concessions

Costs a seller agrees to cover for a VA buyer, up to 4% of the loan for things like prepaid taxes, the funding fee, or debt payoff, on top of normal closing costs they can always pay.

Tidewater process

The VA's low-appraisal procedure: the appraiser signals the value may come in below contract price before finalizing, giving the agent 48 hours to submit comparable sales that support the price.

Title 32 / Title 10 orders

The two legal authorities for Guard duty. Title 10 = federal orders (counts like active duty for VA eligibility). Title 32 = state-controlled, federally funded duty; 90 cumulative full-time days with 30 consecutive now qualifies.

Underwriting

The lender's file-level review of income, credit, assets, and the appraisal against VA rules (and the lender's own overlays) before final approval. Where DTI, residual income, and compensating factors get weighed together.

VA loan

A mortgage made by a private lender and partially guaranteed by the Department of Veterans Affairs. The VA does not lend the money; the guarantee is what enables zero down and no monthly mortgage insurance.

Figures current as of July 2026 (funding fee schedule; FHFA 2026 conforming loan limit). Missing a term you ran into? The guides go deeper on all of these.