Yes, VA Loans Really Do Offer 100% Financing for Home Buyers

Marcus Marion, CMA™ 3 weeks ago 0 5

VA-guaranteed mortgage loans allow borrowers to purchase a home sooner, by providing 100% financing. This means home buyers can finance the entire purchase price, without having to make a down payment of any kind.

It’s a major benefit you won’t find with other types of mortgage loans.

Surprisingly, though, a recent survey showed that a lot of military members and veterans across the U.S. don’t realize VA loans offer 100% financing. And that’s a shame, when you consider that they earned this benefit through their selfless and honorable service to the nation.

We’ve talked about VA loan benefits before, including the ability to avoid making a down payment. Today, we’ll zero in on the ability to finance 100% of the purchase price when using this home loan program.

Many Veterans Don’t Understand VA Loan Benefits

Researchers from recently shared the results of a nationwide survey that included some unfortunate insights on the VA loan program. Among other things, this survey showed that most veterans and military members don’t realize they can finance 100% of the purchase price with a VA loan.

To quote the November 2023 report:

“While many Veterans are aware they have access to Veterans Affairs home loan benefits, which honor their service by making homeownership more accessible, just 3 in 10 know they can use that benefit to buy a home with a zero down payment, according to a new national survey of Veterans and active duty service members.”

The VA home loan program was created in 1944 as part of the Servicemen’s Readjustment Act of 1944, also known as the “GI Bill.” The program was designed to help veterans returning from World War II purchase homes and transition back to civilian life.

Each year, VA loans account for somewhere between 7% and 10% of all mortgage loans generated in the U.S. So it’s a popular program with huge benefits.

The Biggest Benefit: 100% Financing 

One of the key benefits of VA loans is that they offer 100% financing. This means that the veteran does not need to make a down payment at all.

An article on the website, entitled “Ten things most Veterans don’t know about VA home loans,” states the following:

“These are perhaps the biggest advantages to a VA loan. You don’t need a down payment. None whatsoever. Most mortgage programs, such as FHA and conventional loans, require at least 3.5 percent to five percent down. That’s up to $12,500 on a $250,000 home purchase. With a VA loan, you can buy immediately, rather than years of saving for a down payment.”

As of 2023, the median home value in the U.S. was around $350,000. At that price range, the minimum down payment for an FHA loan (3.5%) would come to $12,250. A 5% down payment on a conventional home loan that’s not backed by the government would amount to $17,500.

In a pricey real estate market with higher-than-average home values, the down payment could add up to tens of thousands of dollars.

Because of this, it can take a typical home buyer years to save up for the down payment on a home purchase. But with the 100% financing option that’s available through the VA loan program, buyers can enjoy a much shorter path to homeownership.

How This Program Helps Borrowers

By financing 100% of the purchase price with a VA loan, eligible borrowers can get into a home sooner rather than later.

Granted, most borrowers who use this program still have to pay closing costs, and those can add up to thousands of dollars. But by taking the down payment out of the equation, VA home loans greatly reduce the borrower’s upfront expense.

And that’s just one of the benefits this unique program offers.

1. A faster path to homeownership.

With 100% financing, you can achieve your dream of homeownership sooner. You don’t have to wait until you’ve saved up a large down payment. All you need to do is cover your upfront closing costs.

2. Keep your savings for other expenses.

Traditional mortgage loans often require a large down payment, which can deplete the borrower’s savings. By covering 100% of the purchase price, VA loans prevent this from happening. You can use the money you save (by dodging the down payment) for other expenses like home repairs, moving costs, or unexpected financial events.

3. Increased affordability and more homes to choose from.

With no down payment requirement, individuals who might find it challenging to save a large sum for a down payment can still enter the housing market. This increased affordability widens the pool of potential home buyers.

It also increases your chance of finding a property within your budget. By reducing the upfront costs associated with a home purchase, a VA loan could bring more properties into the affordable category. And that’s a pretty big deal, when you consider the current housing inventory shortage in the U.S.

What to Take Away From All This

It’s worth repeating: many veterans and military members don’t realize they can buy a home with no down payment at all, by using the VA loan program. So let’s drive this point home by reiterating some of the key points covered in this article.

  • VA-guaranteed mortgage loans provide 100% financing, allowing home buyers to finance the entire purchase price without the need for a down payment.
  • This benefit sets VA loans apart from other mortgage options, most of which require at least 3% down and sometimes much more.
  • A recent survey revealed that many military members and veterans are unaware of this 100% financing feature.
  • The 100% financing available through VA loans accelerates the path to homeownership, bypassing years of saving for a down payment.
  • Borrowers can still incur closing costs, but eliminating the down payment significantly reduces their upfront expenses.

Want to help us spread the word? Link to this article or share it through your social media accounts. Let’s work together to educate this deserving audience on their hard-earned benefits!

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