One of the biggest advantages of the VA loan is the ability to buy a home with no money down. But there are situations where a down payment may still apply — here’s everything veterans need to know.
The Standard Answer: No Down Payment Required
For veterans with full VA entitlement, no down payment is required — as long as the purchase price doesn’t exceed the home’s appraised value. This applies to loan amounts of any size. In California, where median home prices in many counties exceed $900,000, this is one of the most powerful financial benefits available to any homebuyer.
When a Down Payment May Apply
| Situation | Why a Down Payment May Be Needed |
|---|---|
| Partial entitlement (existing VA loan active) | Remaining entitlement may be less than 25% of the new loan — veteran covers the gap |
| Purchase price exceeds appraised value | VA only guarantees up to appraised value — difference must be paid in cash |
| Loan amounts above $2,500,000 | Maximum LTV may be capped at 90%, requiring 10% down |
Making a Voluntary Down Payment to Reduce the Funding Fee
| Down Payment | First-Time Use Fee | Subsequent Use Fee |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5% to less than 10% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Even when not required, putting 5–10% down can meaningfully reduce the one-time funding fee — and lower the total amount financed.
Gift Funds Are Allowed
Gift funds from an eligible donor with no financial interest in the transaction are permitted for down payments. A signed gift letter is required. Gift funds cannot be used to satisfy reserve requirements.
Want to See Your Purchasing Power?
At Lendia, we’ll calculate your exact entitlement and show you your options with and without a down payment. Get a free rate quote to start.