It’s hardly a secret that home prices have soared in recent years. As a result, the typical U.S. homebuyer made a $64,000 down payment in March, according to Redfin.
For some buyers, though, coming up with a down payment is a huge barrier to homeownership. And that’s part of what makes the VA loan program so advantageous.
Unlike most mortgages, VA loans do not require a down payment. But many military members and veterans may have missed that memo.
A recent Rocket Mortgage survey found that only 48% of eligible service members consider a VA loan when buying a home. And just 54% are aware that VA loans do not require a down payment.
There’s a reason so many service members are in the dark about VA loans. Here’s what eligible applicants need to know about this loan program.
[Read: Best VA Loans.]
The Big Misconception: Do VA Loans Require a Down Payment?
Not having to make a down payment on a home is a big deal. So why don’t more eligible applicants know that VA loans don’t require one?
As Karl Benjamin, executive vice president of third-party origination at Cardinal Financial, explains, “A lot of eligible service members and veterans simply aren’t getting clear education early enough in the homebuying process. Many buyers still assume they need 10% to 20% down because that’s been the traditional narrative around mortgages for decades.”
Benjamin also says that many borrowers start their search online, where conventional loan information tends to dominate the conversation.
“When a borrower understands up front that they can access zero-down financing, avoid PMI and benefit from competitive rates specifically because of their service, the entire financial picture shifts,” he says.
But it’s not just access to information — or a lack thereof — that’s a factor.
“Military families are often navigating relocations, deployments and major life transitions,” Benjamin says. “Understanding the full range of financing options can fall through the cracks.”
Destinee Stice, vice president of loan origination at NewDay USA in Fulton, Maryland, agrees.
“There are so many benefits thrown at you once you exit the service that it’s hard to keep straight,” she says.
[Read: Best Mortgage Lenders]
Key Benefits of VA Loans: No Down Payment, No PMI, and More
In addition to not having to make a down payment and avoiding private mortgage insurance, “the VA home loan benefit also offers some processes that make buying a home a lot more personal and in your control versus electing for a conventional or FHA product,” Stice says.
Plus, as Benjamin points out, “VA loans also tend to offer competitive interest rates and more flexible credit guidelines than many conventional products. Another overlooked advantage is the VA’s limits on certain closing costs, which can help reduce out-of-pocket expenses for military families.”
Of course, there are still financial considerations to think about.
A NewDay USA survey of military veterans found that 49% of non-homeowners cited saving for up-front costs as a barrier. And 45% expressed concerns over being able to cover closing costs.
But as Stice says, “There are programs available and ways to cover the closing costs. Consult with a lender that specializes in VA and offers niche products, because it is possible to get no money out of pocket at closing.”
[See: Best Mortgage Lenders for First-Time Homebuyers]
Risks and Disadvantages of VA Loans to Consider
Of course, there are some VA loan pitfalls to watch out for. Benjamin says one trap borrowers risk falling into is confusing the down payment benefit with affordability.
“It’s also important for borrowers to understand that while a zero-down-payment structure can improve accessibility, it may result in a higher monthly payment compared to putting money down up front. That’s why evaluating long-term affordability remains critical,” he says.
Of course, with 0% down, VA loan borrowers are also starting off with no home equity. But Benjamin says that’s not necessarily a problem.
“A zero-down-payment loan is not inherently risky if the borrower is financially prepared for the full cost of homeownership,” he says.
Benjamin also points out that VA loans typically require a funding fee that can increase the total cost of the loan. That fee ranges from 1.25% to 3.3% of the loan amount, depending on whether a down payment is made and whether it’s the applicant’s first time getting a VA loan or not.
“Some veterans are exempt depending on disability status, but it’s still an important factor for borrowers to understand,” he says.
Stice, meanwhile, says that one of the biggest misconceptions about VA loans is that appraisals are more stringent than other loan programs.
“While the VA appraisers follow a slightly different process, they are ensuring the home is in livable condition so the veteran’s family is protected,” she says.
How Applicants Can Prepare for a VA Loan
Ultimately, VA loans eliminate the down payment requirement, which can be a major obstacle to buying a home in today’s market. Stice warns, though, that just because VA loans don’t require money down doesn’t mean borrowers don’t have to be financially prepared.
“Ensure your debts are as minimal as possible, since you are entering into a large monthly payment,” she says.
Stice also recommends making sure you have a strong credit profile before applying for a VA loan. While there’s no specific credit score requirement for these loans, keeping your debt to a minimum could work to your advantage during the application process.
It’s also a good idea to check your credit report before applying for a VA loan to ensure that it’s accurate and address any potential red flags.
“If there are accounts in collections or charged off, those could impact your ability to buy a home,” Stice says. “So start exploring options to remove those accounts as you begin your search.”
Benjamin, meanwhile, says VA loan applicants need to think about their long-term finances and housing costs. “The borrowers who get the most out of a VA loan’s zero-down structure are typically the ones who enter with a clear long-term plan, not just a qualified application,” he says. “The conversation should extend beyond what’s possible at closing and focus on what the loan looks like years down the road.”
More from U.S. News
Homebuyers Are Getting Cold Feet. How to Cash In on Back-on-Market Deals
Mortgage Rate Lock Outlook for June 2026: Should You Lock in With This Week’s Rates?
The Salary You Need to Buy a House in Florida in 2026
VA Loans Don’t Require a Down Payment. Half of Service Members Didn’t Know This Perk. originally appeared on usnews.com
