You don't need a down payment for a VA loan
A VA loan is a mortgage backed by the Department of Veterans Affairs that lets you buy a home with zero down payment. You can borrow the full purchase price without putting money down first. This is one of the largest differences between VA loans and conventional mortgages, which typically require 3 to 20 percent down.
The VA doesn't lend the money itself — a bank, credit union, or mortgage company does. The VA guarantees a portion of the loan, which means if you stop paying, the government covers the lender's loss up to a certain amount. Because the lender has this protection, they're willing to lend without requiring you to save up a down payment first.
You still have to pay a VA funding fee at closing, which is a one-time charge that goes to the VA. This fee is not a down payment — it's insurance for the lender. The fee ranges from 1.4 to 3.6 percent of the loan amount, depending on whether this is your first VA loan use and what type of property you're buying. Most borrowers roll this fee into the loan amount rather than paying it out of pocket.
Key Takeaways
- VA loans require zero down payment, meaning you can borrow 100 percent of the home's purchase price.
- You must pay a VA funding fee at closing, which typically ranges from 1.4 to 3.6 percent of the loan amount and can be added to your loan balance.
- The VA funding fee is not a down payment — it's a one-time insurance charge that protects the lender if you default.
- You need a Certificate of may be able to access from the VA and a valid debt-to-income ratio to may have access to, but savings or a down payment are not required.
- Some borrowers still choose to put money down to lower their monthly payment or reduce the total interest paid over the life of the loan.
What you actually need to may have access to for a VA loan
To get a VA loan, you need a Certificate of may be able to access from the VA, proof of income, and a debt-to-income ratio that the lender will accept. The debt-to-income ratio is the percentage of your monthly income that goes toward debt payments. Most lenders want this to be 41 percent or lower, though some go up to 50 percent.
You don't need savings, a down payment, or a perfect credit score. Lenders have different credit score minimums — some start at 580, others at 620 or higher — but the VA itself doesn't set a minimum. You do need to show that you can afford the monthly payment based on your income and existing debts.
The lender will order a home appraisal to make sure the house is worth what you're paying for it. If the appraisal comes in lower than the purchase price, you have the option to renegotiate the price, walk away, or cover the difference yourself. The VA won't let you borrow more than the home is worth.
The VA funding fee explained
The VA funding fee is a one-time charge that varies based on your situation. For a first-time VA loan on a single-family home, the fee is typically 2.3 percent of the loan amount. If you've used a VA loan before, it drops to 0.55 percent. If you're buying a manufactured home or a multi-unit property, the rates are different.
If you're receiving disability compensation from the VA, you don't pay a funding fee at all. The same applies if you're the surviving spouse of a service member who died in service or from a service-connected disability.
Most borrowers add the funding fee to the loan amount rather than paying it upfront. This means you finance it over 15 to 30 years along with the rest of the mortgage. If you have cash available and want to lower your monthly payment, you can pay the fee out of pocket at closing.
When you might choose to put money down anyway
Even though you don't have to put money down, some borrowers do. The main reason is to lower the monthly payment. If you put 10 percent down, your loan amount is smaller, your monthly payment is lower, and you pay less interest over the life of the loan.
Putting money down also reduces the VA funding fee, since the fee is calculated on the loan amount. A smaller loan means a smaller fee. If you're buying a home for $300,000 and put $30,000 down, you're borrowing $270,000 instead of $300,000, which saves you money on both the fee and the interest.
Another reason to put money down is to avoid being underwater on the mortgage — owing more than the home is worth. If the housing market drops after you buy, having equity from a down payment protects you. However, this is optional; the VA loan program itself does not require it.
How the VA may provide protects the lender, not you
The VA may provide is what makes the zero-down-payment loan possible. When you get a VA loan, the VA promises to cover a portion of the lender's loss if you default. The may provide amount is currently $36,000 or 25 percent of the loan amount, whichever is less.
This may provide is for the lender's protection, not yours. It doesn't mean the VA will forgive your debt or help you if you can't pay. If you stop making payments, the lender will foreclose, and the VA will reimburse the lender for part of the loss. You are still responsible for the full debt.
The VA funding fee exists partly because of this may provide. It's a way to fund the program and offset the risk the VA is taking on. If you default, the funding fee money helps cover the VA's payout to the lender.
Comparing VA loans to other zero-down options
VA loans are not the only mortgages that don't require a down payment. USDA loans, available to rural homebuyers who meet income limits, also offer zero down. FHA loans require only 3.5 percent down, which is much lower than conventional loans.
The main advantage of a VA loan over these options is the funding fee. While VA funding fees range from 1.4 to 3.6 percent, FHA loans require mortgage insurance that costs 0.55 to 0.8 percent annually for the life of the loan. Over 30 years, FHA insurance costs far more than a one-time VA funding fee. USDA loans also charge annual insurance, though it can be lower than FHA.
VA loans also typically offer better interest rates than FHA or USDA loans because the VA may provide makes them less risky for lenders. If you're may be able to access for a VA loan, it's usually the cheapest path to homeownership without a down payment.
What happens if you want to refinance later
If you refinance a VA loan into another VA loan, you may pay a funding fee again. The fee on a refinance is typically 0.55 percent for most borrowers, which is lower than the original fee. If you're refinancing to lower your interest rate, this smaller fee might still be worth it.
You can also refinance a VA loan into a conventional mortgage if your home has gained value and you want to avoid the refinance fee. Once you have equity in the home, conventional lenders may accept a smaller down payment than they would have at purchase.
Some borrowers use a VA streamline refinance, which is a faster process with less paperwork. You still pay the funding fee, but the process moves quickly and requires less documentation than a standard refinance.
Frequently Asked Questions
Can I use a VA loan to buy a second home or investment property?
VA loans are for primary residences only — the home you plan to live in. You cannot use a VA loan to buy a vacation home, rental property, or investment property. You can use your VA loan benefit multiple times over your lifetime, but each loan must be for a home you'll occupy.
What if I don't have a Certificate of may be able to access yet?
You can request a Certificate of may be able to access from the VA through their website, by mail, or through your lender. The process usually takes a few days to a few weeks. Many lenders can start your application while you're waiting for the certificate, so you don't have to delay the process.
Do I have to pay property taxes and homeowners insurance without a down payment?
Yes. A down payment is separate from property taxes, homeowners insurance, and HOA fees if applicable. These are ongoing costs that don't change based on whether you put money down. Your lender will require proof of homeowners insurance before closing.
Can I get a VA loan if I'm still on active duty?
Yes. Active-duty service members can use their VA loan benefit. You'll need a Certificate of may be able to access, which you can request through your military branch or the VA website. Your lender will verify your income and employment status.
What if the home appraises for less than the purchase price?
You have three options: renegotiate the price with the seller, cover the difference out of pocket, or walk away from the deal. The VA won't allow you to borrow more than the appraised value, so you can't make up the gap by increasing the loan amount.