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VA Loans & Down Payments

One of the greatest advantages of choosing a VA home loan over a conventional one is that VA loans do not require a down payment. The Department of Veterans Affairs allows veterans to finance the down payment into their loan, which speeds up the home buying process by eliminating the need to save the money required for the payment.

Individuals who are obtaining a VA loan and can afford to make a down payment may find it beneficial as doing so will reduce the cost of their funding fee. Currently, the funding fee on no down payment loans is 2.15%. However, if a veteran is able to make a down payment of at least five percent, the funding fee can be reduced to 1.5%. Further more, a down payment of ten percent will reduce the funding fee to 1.25%.

While the option of a no down payment VA loan is a great benefit to qualifying individuals, those who are capable of producing a down payment may want to consider doing so in an effort to save even more money by reducing the cost of their funding fee.

Back to the Veterans' Loan Handbook Table of Contents.