A VA mortgage loan is an extremely favorable loan that is open to active and former veterans. With a VA loan, you don't need to produce any down payment. You also don't need to have any specific credit score. So, when should you actually put down money towards a VA loan? Here are some things to consider.
Have You Received a VA Loan Before?
When you get a VA loan, the down payment isn't just "free." It's subsidized by the government. If you would need a $10,000 down payment, that comes from a government fund. But, that does have a lifetime cap on it. If you've gotten a VA loan before, you may have already paid out all the money you can. You will still be able to get a VA loan, but you'll need to make a down payment.
Do You Want a Larger House?
Let's say you're approved for a $200,000 house, but you have your heart set on a $220,000 house. The way that you can get it is to put down a $20,000 down payment. The amount that you qualify for isn't the amount of the house value; it's the amount of the loan. If you paid $120,000 down, you could get a $320,000 house.
Are You Looking for a Lower Monthly Payment?
The major reason people put more down is because they want a lower monthly payment. If you put more down, not only will you being paying less every month, but you'll also be paying less in interest. If you can afford to pay more, you can pay your house down faster, which will reduce the amount of interest you pay over the life of the loan.
Is Your Funding Fee High?
When getting a VA loan, there will be a funding fee. This funding fee is usually a small percentage of the loan value. If the funding fee is high, there's a way you can reduce it: by putting forth a down payment. A down payment will lower the total amount borrowed, and will consequently lower the amount that you need to pay. Since the funding fee is often rolled into the cost of the loan, this also reduces your monthly payments.
You should talk to your VA mortgage lenders about your home-related goals before you decide how much money you want to put down. Even though you probably don't need to put anything down, there are many situations in which it could be better to do so.