Nathan Strodtbeck, REALTOR®

VA Loans 101

VA loans,
without the guesswork.

The VA loan is one of the strongest mortgage products available, and it's also one of the most misunderstood, by buyers, sellers, and even some agents. This page covers what actually matters when you use yours.

Why Nathan

A veteran-aware practice.

Nathan served in the Army from 2020 to 2025, stationed at Fort Hood with deployments to Poland and Kuwait. He knows the culture, the paperwork, and the timelines veterans deal with, and he's spent real time learning the VA loan program from the agent side so his clients aren't the ones teaching the lender how it works.

He works with plenty of non-VA buyers too. This isn't a veteran-only practice. But when a client is using a VA loan, he makes sure the lender understands residual income, the funding fee rules, and how to present the offer so it holds up against conventional bids.

Full background on the about page.

What's different

What makes VA loans different.

Residual income

The test most calculators ignore

The VA requires that, after your mortgage payment, taxes, insurance, debts, and a rough estimate of monthly utilities and upkeep, you still have a minimum amount of discretionary income left over. The number depends on family size, region, and loan amount, Michigan uses the Midwest table. It's a stricter sanity check than debt-to-income alone, and it's the main reason a civilian affordability calculator can tell you one number while a VA-savvy lender tells you another. When DTI exceeds 41%, most VA lenders want the borrower to show at least 120% of the regional residual minimum, a 20% cushion. The literal VA rule is softer, calling for documented compensating factors, but the 120% practice is how the program actually runs.

Funding fee waiver

Read this carefully

The VA funding fee is the one-time cost the VA charges to keep the loan program running. For most first-time purchase loans with less than 5% down, it's 2.15% of the loan amount; for subsequent uses it jumps to 3.3%. Putting more money down lowers the fee.

The fee is waived entirely, $0, for veterans who receive or are entitled to receive VA compensation for a service-connected disability (including cases where a pre-discharge memo rating has been issued), veterans rated individually unemployable, Purple Heart recipients on active duty, and surviving spouses receiving Dependency and Indemnity Compensation. Receiving BAH does not qualify you for the waiver. This is the single most common mix-up, and getting it wrong at the pre-approval stage costs real money.

No PMI, ever

Conventional loans with less than 20% down charge private mortgage insurance, often $150 to $300 a month. VA loans don't, regardless of your down payment. Over the life of a loan, that's the kind of number that changes what you can actually afford.

BAH as qualifying income

Lenders who know the VA program count Basic Allowance for Housing as qualifying income at face value. BAH is tax-free, but it's already designated for housing, so most VA lenders take it at the raw number rather than grossing it up. Other non-taxable income (like VA disability compensation) is typically grossed up by 1.25×, which is where the "tax-free gross-up" rule most people have heard about actually applies. Lenders Nathan works with regularly handle both correctly on the first pass.

Common Questions

Frequently asked.

How does the VA funding fee work?
It's a one-time fee paid at closing, built into the loan program to keep it self-sustaining. For a standard purchase loan, first-time users with less than 5% down pay 2.15% of the loan amount. Subsequent uses with less than 5% down pay 3.3%. Put 5% to 9.99% down and the fee drops to 1.5% for both first and subsequent use; 10% or more drops it to 1.25%. Streamline refinances (IRRRLs) are a flat 0.5%. Most buyers roll the fee into the loan rather than pay it in cash.
Am I exempt from the funding fee?
You are fully exempt if you receive or are entitled to receive VA compensation for a service-connected disability, including cases where a pre-discharge memo rating has been issued. The exemption also applies if you have been rated individually unemployable, if you are a Purple Heart recipient serving on active duty, or if you are a surviving spouse receiving Dependency and Indemnity Compensation. Drawing BAH does not make you exempt. Having served honorably but without a service-connected disability rating does not make you exempt. If you're unsure of your status, your COE (Certificate of Eligibility) will show it, ask your lender to pull it early so you know where you stand.
Does BAH count as income?
Yes, for lenders who know the VA program. BAH is treated as qualifying income on the application at face value, not grossed up. The reason most people have heard about a 1.25× gross-up is that it applies to other tax-free income like VA disability compensation or non-taxable Social Security, not to BAH itself. The practical result is still that an active-duty or reserve client can usually qualify for meaningfully more house than the base-pay number alone would suggest, because BAH is counted in full on top of base pay.
Can I get a property tax exemption in Michigan as a disabled veteran?

Yes, and it's one of the strongest benefits in the state. Under MCL 211.7b, Michigan exempts the homestead of a qualifying disabled veteran from property tax entirely, not a reduction, a full exemption. You qualify if you were discharged from the armed forces under honorable conditions, are a Michigan resident, and the VA has rated you 100% permanently and totally disabled, rated you individually unemployable, or certified you as receiving (or having received) pecuniary assistance for specially adapted housing. Unremarried surviving spouses of eligible veterans also qualify. There's no income or asset test.

To apply, file Form 5107 (Affidavit for Disabled Veterans Exemption) with your local city or township assessor, not the state. Bring VA documentation showing your rating. Once granted, the exemption remains in effect without annual re-filing. This change took effect with the 2025 filing year under Public Act 150 of 2023. If your most recent filing was for tax year 2024 or earlier, confirm with your local assessor that the exemption is still on file, since the rule required annual renewal through the 2024 tax year. Apply early in the year if you can; retroactive refunds are possible but messy. Nathan can point you toward the right forms and the right office; for anything beyond paperwork logistics, consult a tax professional or the Michigan Department of Treasury.

Do VA loans take longer to close than conventional?
Not with the right lender. The myth comes from a real thing: VA loans have extra steps (COE pull, VA appraisal with Minimum Property Requirements) that can slow down a shop that doesn't do them often. Industry averages run longer for VA than conventional, but a lender who closes VA loans every week can move a purchase in the 30 to 40 day range, sometimes faster. The appraisal is the most common bottleneck, and experienced VA lenders order it immediately.
Will sellers accept my VA offer?
Most will, once it's framed correctly. The two real concerns from listing agents are: (1) the VA appraisal can call out repair items under the Minimum Property Requirements, and (2) they've heard stories about VA deals falling through. Both are addressable. A clean pre-approval from a recognized VA lender, a reasonable inspection stance, and an agent who can talk the listing agent through the appraisal process up front goes a long way. In a balanced market your offer competes on terms, not just program. In a tight market, Nathan will tell you honestly how to structure it.
What are Minimum Property Requirements?
The VA requires the appraiser to confirm the home is safe, sound, and sanitary, no peeling paint on pre-1978 homes, working heat, no active roof leaks, functional plumbing and electrical, no structural safety issues. It's more thorough than a conventional appraisal but less invasive than an inspection. If the appraiser flags something, the usual path is a seller repair or a re-inspection after the fix. It rarely kills a deal when everyone knows what to expect.
Can I use a VA loan more than once?
Yes. VA loan entitlement is a benefit, not a one-shot. You can use it to buy, sell, and buy again. You can even hold two VA loans at the same time in some cases, useful for a PCS or when you're turning your current home into a rental. Subsequent-use funding fees are higher unless you're exempt, but the benefit itself doesn't expire.

Next Step

Talk to Nathan.

Run the numbers on the calculator, download the VA Buyer's Guide, or send a note with your situation and Nathan will get back the same day.

Open the calculator Free VA Buyer's Guide

Tell Nathan what you're working on, service status, timeline, price range, and any questions you've been getting mixed answers on.

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