Is a VA Loan a 100% Loan?

When using the VA Loan, borrowers are not required to put any money down as a down payment. This means that the loan covers 100% of the cost of the home, including any closing costs or fees that you are required to pay. If you opt for a VA Rehab Loan, you can even roll in certain renovations and upgrades into your mortgage. So yes, the VA Loan is a 100% loan in many cases.

There are a few special circumstances where you may be required to put money down as a down payment, even when using the VA Loan.

The appraisal is too low. As part of the VA Loan process, an independent appraiser will come out to determine the value of the home. They look at its condition, upgrades, as well as what other comparable homes in the area have sold for recently. They then determine an appraisal value. If that amount is less than the amount of the loan, you may need to cover the difference.

You do not qualify. Just like with any mortgage, you will need to qualify for the loan through your lender. Just because the VA is willing to guarantee the loan based on your military service doesn’t mean that the lender is ready to write a blank check. They will use your current income, debt payments, and the amount of the loan to determine if you qualify. If you do not qualify, you may need to put money down as a down payment to lower the loan amount.

You want to have a lower monthly payment. Just because you can use the VA Loan’s 0% down payment benefit doesn’t mean that you have to. Putting some money down as a down payment will lower the amount that you borrow as part of your loan. This means a lower monthly payment, less interest paid, and a cheaper purchase overall.