Should You Supply a Down Payment When You Buy With a VA Loan?

A VA loan is a loan backed by the Department of Veteran's Affairs. Veterans and service men and women have access to VA loans as do their surviving spouses. VA loans are known to have many attractive benefits for home buyers on a budget. They're distinctive from many other types of mortgages in that they do not require a down payment and also do not require the home buyer to pay for mortgage insurance. This can save the person buying a home a great deal of money, and can make home buying a possibility for people who may not otherwise be able to afford this kind of purchase.

For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.

Benefits of Making a Down Payment

Although home buyers are not required to supply a down payment, they are still encouraged to make a down payment if they can afford it. There are benefits of making a down payment:

Reduced Monthly Payments

A home buyer who puts money down up front will need to borrow less money to purchase a home. Over time, that home buyer will also enjoy lower payments toward their mortgage each month, which can make owning a home more affordable over the life of the mortgage. Additionally, this is also beneficial in the event that the home buyer ever experiences financial hardship, because the payments will be lower and easier to make.

Better for Your Mortgage Application

Although home buyers aren't required to put money down for their loan, it's still looked upon favorably if they're able to. This can help the home buyer get approved for a better loan with a better rate.

Sellers May Have More Confidence In the Offer

Buying a home requires a lot of money. Home buyers who appear to have few resources for purchasing a home may not inspire confidence in the home seller who is considering the offer. If the offer is made at the same time as another offer from another potential buyer, the home seller may not select the offer made by the buyer who is offering no money down.

Disadvantages of Making a Down Payment

Although down payments are generally encouraged, for some people it's better not to make a down payment. Some disadvantages of making a down payment include:

• Less money for moving expenses. Moving can cost thousands of dollars, so putting the money toward a down payment detracts what can be used for moving.
• Less money for home repairs. If the home is a "fixer upper," then the money that goes toward the down payment may prevent the home buyer from making the repairs they would otherwise like to make.
• Less money in savings. Putting money into a down payment can deplete savings, which may be needed for other things.

Your lender can help you decide whether it's better to put money down for your home purchase. Although your lender won't be able to make your decision for you, a good lender can tell you whether the decision not to make a down payment could prevent you from getting the loan amount you want, or if it could have other negative effects.

Contact Your Real Estate Professional

If you're a Woodland Park home buyer who is thinking about purchasing a home with a VA loan, talk to a real estate professional. Your real estate agent can help you choose a home, make an offer and negotiate a good price. Work with your experienced real estate agent to make the home buying process a success.

For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.