Understanding VA Loan Down Payment Requirements: A Complete Guide

If you are house hunting and eligible for a U.S. Department of Veterans Affairs (VA) loan, you may wonder whether you need to make a VA loan down payment. The answer depends on your entitlement benefits. While most military members don’t have to make a down payment, it may be necessary in a few circumstances. Here’s what you need to know about the VA home loan down payment requirements.

Key takeaways

• VA loans generally don’t require a down payment if you can access your full entitlement benefits.
• If you have only partial entitlement benefits, you may need to make a down payment equal to 25% of the loan amount minus your remaining entitlement.
• You can find your entitlement amount by looking at your Certificate of Eligibility (COE).

Do VA loans require a down payment?

The short answer is: It depends.

As long as you have full entitlement, a VA home loan down payment is not required. (You can find out about your entitlement by looking at your Certificate of Eligibility (COE)). That said, there may be some situations in which it could be beneficial to make a down payment, regardless of whether it’s required by your mortgage lender or not.

If you have only partial entitlement, a down payment may be required. (More on that below.)

Why there are no set VA loan down payment requirements

While many homebuyers assume that the VA funds loans for veterans directly, the VA loan process works a bit differently.

Instead, the VA offers a guaranty to private mortgage lenders who offer VA loans. This guaranty protects the lender from taking a large loss if a veteran stops making payments on their home loan. It states that the VA will back up to 25% of the loan amount if a veteran borrower with full entitlement defaults on their mortgage.

Since mortgage lenders are better protected by the VA loan guaranty, they can offer veteran borrowers more favorable terms on their mortgage loans, including 0% down payment options.

Minimum down payment requirements: VA loans vs. other loan types

Now that you know more about VA loan down payment requirements, let’s take a look at how they stack up against other types of mortgage loans.

 Want to learn more about how to qualify for a mortgage? Check out the minimum mortgage requirements for 2025.

Benefits of making a VA home loan down payment

Even if you have full entitlement, there may be some instances in which it makes sense for you to make a down payment on a VA loan. Here are four benefits of making a down payment:

1. Lower VA funding fee

The VA funding fee is a one-time fee charged whenever you close on a VA home loan. This fee is meant to help reduce the financial burden on taxpayers and keep the program running for future generations.

This fee ranges from 1.25% to 3.30% of the loan amount. However, you can reduce it by making a larger down payment when you buy a home.

Let’s take a closer look at how the VA funding fee charges break down:

2. Smaller monthly payments

If you make a down payment, your total loan amount will be reduced, and your monthly payments will be lowered as a result. Plus, it will also help you save on interest charges over the life of your loan.

For example, if you purchase a $350,000 home with a 30-year fixed-rate mortgage and a 7% interest rate with no down payment, your monthly payments would be $2,328.56 for principal and interest. By making a 5% down payment, you could reduce your monthly payments by more than $116 and your total interest charges by almost $25,000.

3. More home equity

Your home equity is measured by taking the current value of the home and subtracting the amount you owe on your mortgage balance. For example, if you have a home valued at $250,000 and owe $100,000 on a VA mortgage, your home equity is $150,000.

There are several reasons why you may want to build equity in your home. For one, it lowers your chances of becoming underwater on your mortgage. For another, it may make it easier to borrow money in the form of a home equity loan or home equity line of credit (HELOC) if you need to cover a large expense in the future.

By making a down payment on your VA loan, you can start building home equity right away.

4. Increased chance of loan approval

Although a VA loan doesn’t require it, making a down payment could show you are serious about the purchase, potentially increasing your odds of approval by the lender. This could be especially helpful if other financial factors aren’t as strong, such as your credit score or debt-to-income (DTI) ratio.

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2 times a VA loan down payment might be required

Let’s take a closer look at when you might be required to make a down payment on a VA loan.

1. Your home’s purchase price is higher than its appraised value. VA loans only let you borrow up to the appraised value of the property. If you need to pay more than that for the home, you’ll need to make up the difference in the form of a down payment.
2. You have partial entitlement. If you’ve defaulted on a VA loan in the past or own a home financed by a VA loan, you’ll have only a partial entitlement. Per VA rules, if the home you want to buy costs more than $144,000, you must use a combination of your remaining entitlement amount and a down payment to cover at least 25% of the loan amount.