6 Advantages of a VA Loan Down Payment

One of the most-loved features of the VA home loan is that you don’t need to make a down payment. But you might still want to put some money down upfront. Here are some of the benefits:

Do You Qualify Without a Down Payment?

If your debt-to-income ratio and credit score qualify you for the home loan amount you need, then a down payment isn’t necessary. However, if the home you have in mind falls a little outside of this range, a down payment can make a significant difference in how much you qualify for. It can also give you better bargaining power in the market.

Are You Satisfied With The Interest Rate?

There are two reasons a down payment can be a benefit. First, it reduces the loan-to-value ratio. Second, most lenders reduce interest rates to match the reduced risk associated with making a bigger down payment. If you want a lower interest rate, this is the best way to secure one. Bigger upfront payments also reduce how much money you pay in interest over the lifetime of the loan.

What’s Your Monthly Budget?

What are you comfortable paying each month? Making a down payment on your VA loan can significantly reduce your monthly obligations.

Are You Focused on Building Equity?

Underwater mortgages occur when the amount owed on the home is worth more than the home itself. This can happen during market fluctuations or if the community loses value. Down payments help combat this by putting immediate equity into your home and your mortgage.

How Much Savings Do You Have?

If you’ve been saving to purchase a house for some time, you might feel ready to spend all of the money earmarked for this purpose. However, the first year of homeownership might be a little more expensive than you think. Therefore, keep some of this money saved, so you can cover unexpected expenses that might arise.

Would You Like to Waive the Fee?

There is a VA funding fee associated with your loan. It helps fund the program for veterans and military service members for generations to come. It’s usually calculated as a percentage of your total loan value. A down payment can reduce that total amount, thereby reducing the fee amount.

Connect With The Experts

At Hero Home Loans, we specialize in VA loans. We’re happy to guide you through the process and can answer any questions you may have. Contact us today!