Can You Put Money Down on a VA Loan?

VA loans provide a significant benefit for eligible service members, veterans, and surviving spouses by often requiring no down payment for home purchases. While zero down is a common advantage, borrowers also have the flexibility to make a down payment on a VA loan if they choose.

Understanding VA Loan Down Payments

A hallmark of the VA home loan program is its provision for 100% financing, meaning qualified borrowers do not need to provide an upfront cash payment to secure a mortgage. This capability allows many to achieve homeownership who might otherwise face challenges accumulating a substantial down payment. The Department of Veterans Affairs permits borrowers to contribute a down payment towards their home purchase. A down payment represents a portion of the home’s purchase price paid upfront by the buyer, directly reducing the amount of money financed through the mortgage.

The decision to make a down payment on a VA loan is entirely at the borrower’s discretion, as it is not a mandatory requirement for loan approval in most cases. When a down payment is made, it directly lowers the principal loan amount. This reduction in the financed sum can influence various aspects of the loan, from monthly payment obligations to certain upfront costs associated with the VA loan program itself.

Financial Impact of a Down Payment

Making a down payment on a VA loan can affect the VA Funding Fee and the principal loan amount. The VA Funding Fee is a one-time charge paid to the Department of Veterans Affairs. This fee is calculated as a percentage of the total loan amount and varies based on factors such as the loan purpose, the size of the down payment, and whether it is the borrower’s first or subsequent use of their VA loan benefit.

For instance, for a first-time VA loan user, the funding fee without a down payment is 2.15% of the loan amount in 2025. However, if a borrower makes a down payment of 5% to less than 10%, the fee decreases to 1.5%. A down payment of 10% or more further reduces the fee to 1.25% for first-time users.

For subsequent use, the fee is 3.3% with no down payment, but also drops to 1.5% with 5% to less than 10% down, and 1.25% with 10% or more down. Certain individuals, such as veterans receiving VA compensation for service-connected disabilities or Purple Heart recipients on active duty, are exempt from paying this fee entirely.

A down payment directly lowers the principal amount borrowed. A smaller loan amount translates to lower monthly mortgage payments. This reduction in the principal also means less interest accrues over the life of the loan, leading to substantial long-term savings. The total cost of borrowing decreases, providing a clear financial advantage to those who can afford to make an upfront payment.

Strategic Considerations for Making a Down Payment

Borrowers might strategically choose to make a down payment on a VA loan for several reasons, even when it is not mandated. One such consideration arises in high-cost housing markets where property values exceed the standard VA loan limits for borrowers with partial entitlement. While veterans with full entitlement generally face no VA-imposed loan limits, those with partial entitlement or who have previously used their benefit may find that a down payment allows them to purchase a home above their no-down-payment limit. A down payment can bridge the gap between the purchase price and the maximum amount the VA will guarantee without a down payment, expanding housing options.

Another strategic reason involves making a loan offer more competitive in a seller’s market. Some sellers may perceive offers with no down payment as less financially secure compared to conventional offers with significant down payments. Providing a down payment can signal a buyer’s strong financial position and commitment, potentially making their offer more attractive to a seller. This can be a deciding factor in securing a desired property, particularly when multiple competitive bids are present.

Additionally, some borrowers opt for a down payment as a personal financial decision to build equity faster. Paying a portion of the home’s value upfront means the borrower immediately owns a larger share of the property. This increased equity provides a financial cushion and can offer greater flexibility in the future, such as for home equity loans or lines of credit.