Published , 3 minute read
Quick answer: No — most VA borrowers don't need a down payment. If you have full entitlement and the home appraises for at least the purchase price, you can typically buy with $0 down. A down payment may be required if you have partial entitlement and are buying above your zero-down limit, or if you agree to pay more than the appraised value. Even when it's not required, putting 5% or 10% down can lower your VA funding fee and your monthly payment.
When you can buy with $0 down
- You have full entitlement, and
- You qualify for the loan amount based on income, debts, and credit, and
- The home appraises at or above the purchase price.
Zero down doesn't mean zero cash. You'll still typically need money for earnest money, the option fee in Texas, inspections, and possibly closing costs — unless the seller or lender covers them.
When a down payment may be required
Partial entitlement. If you still have an active VA loan, you may need a down payment on a new purchase above your zero-down limit — typically 25% of the amount over that limit.
Low appraisal. If the home appraises below the contract price, VA won't lend above the appraised value. You can renegotiate, request a reconsideration of value, or pay the difference in cash if you choose.
Lender requirements. Some lenders require a down payment on very large VA loans or for certain credit profiles.
Why some veterans choose to put money down
1. A lower funding fee. For a first-time VA purchase, the funding fee drops from 2.15% to 1.5% with at least 5% down, and to 1.25% with at least 10% down. For subsequent use, it drops from 3.3% to the same 1.5% and 1.25%.
Example (first use, $400,000 home):
Down payment | Loan amount | Funding fee rate | Funding fee |
|---|---|---|---|
$0 | $400,000 | 2.15% | $8,600 |
$20,000 (5%) | $380,000 | 1.5% | $5,700 |
$40,000 (10%) | $360,000 | 1.25% | $4,500 |
Veterans exempt from the funding fee (such as those receiving VA disability compensation) don't get this benefit from a down payment.
2. A lower monthly payment from a smaller loan balance.
3. Instant equity, which helps if you need to sell within a few years.
4. A stronger offer in a competitive situation, though a well-prepared VA offer can compete without one.
When keeping your cash makes more sense
A down payment is hard to get back out of a house. Many veterans are better off keeping cash for emergencies, moving costs, and repairs. Since VA loans have no monthly mortgage insurance, the benefit of putting money down is smaller than on conventional or FHA loans. Compare both with your loan officer before deciding.
FAQ
Can I really buy a house with no money down using a VA loan? Yes, with full entitlement and a qualifying appraisal. You'll usually still need some cash for upfront costs like earnest money and inspections.
Does a down payment lower my interest rate on a VA loan? Sometimes slightly, depending on the lender's pricing. The bigger savings usually come from the lower funding fee and loan balance.
Can I use gift money for a VA down payment? Yes, gift funds are allowed with proper documentation.
What if I'm exempt from the funding fee? Then there's less financial reason to put money down, since the fee is already $0.
Wondering whether to put money down or keep your cash? Call or text Mike Tanas at 214-604-5245
This article is general education, not financial, tax or legal advice. Guidelines change and vary by lender. Talk with Mike about your own situation.