Welcome to Joe Knows Mortgages MINUTE, where we answer your mortgage questions.

On this week’s Joe Knows Mortgages MINUTE, we answer the question:

How does putting money down affect my VA loan?

When a veteran chooses to put money down as a down payment on a purchase using a VA loan, there are two main benefits to the veteran:

  1. The down payment means that less is borrowed, so the payment will be lower.
  2. With specific down payments, there are reduced funding fee requirements. The funding fee is a set percentage based on specific down payments that the VA uses to guarantee the loan against default to the lender.  These are standard on all VA loans, unless the veteran borrower is funding fee exempt per the VA.

Please see Figure 1 below.

Figure 1.VA Funding Fee Table

To recap, with a down payment, the veteran’s payment will be reduced, as well as, the required funding fee amount in association with the amount of down payment.

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Figure 1: Funding Fee Table https://www.benefits.va.gov/homeloans/documents/docs/funding_fee_table.pdf