No Down Payment: VA Loan Benefit for Washington Home Buyers

March 21, 2023
Last updated:
March 21, 2023
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We’ve written about the VA loan program many times in the past, to explain all of the great benefits it provides. Today, we will drill down on what is arguably the biggest benefit of VA home loans.

This program allows eligible borrowers to buy a house in Washington with no down payment whatsoever, thereby removing one of the biggest hurdles to homeownership.

No Down Payment: One Benefit of the VA Loan Program

A VA loan is similar to a conventional or “regular” mortgage loan, but with a few important distinctions. Through this program, home buyers in Washington can purchase a house with no down payment. That’s because the federal government backs these loans by providing a partial guarantee for the lenders that offer them.

There are other benefits as well, including the ability to avoid paying mortgage insurance. But for this article, we will focus on the down payment aspects of this program, and how they benefit Washington home buyers.

With most mortgage loan options, borrowers have to make some kind of down payment to qualify for financing. For example, conventional loans that are not backed by the government typically require at least 3% down, and sometimes more. Home buyers who use the Federal Housing Administration (FHA) loan program have to invest at least 3.5%.

For many home buyers in Washington, down payment requirements can put homeownership out of reach. Even those who earn plenty of money to manage their monthly payments sometimes have trouble saving up for the down payment. And that’s understandable, when you consider how much home prices have risen over the past few years.

And that brings us back to the VA loan program and the powerful benefits it offers to borrowers. This is one of the only programs that allows borrowers to finance up to 100% of the purchase price. Conversely, this means that eligible borrowers can buy a house without making a down payment at all. So it eliminates one of the biggest obstacles to homeownership.

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A Real-World Example With Home Prices

This benefit will be even more impressive once we plug in some actual numbers.

As we’ve already explained, military members and veterans in the state of Washington can use a VA loan to buy a house with no down payment. This could allow you to purchase a home sooner, by reducing the amount of money you have to save.

As of February 2023, the median home value in the state of Washington was around $552,398. In a typical home-buying scenario, the down payment is a percentage of the purchase price. So the higher the price of the home, the larger the down payment you have to make.

Let’s use the current median home price to see what a typical down payment might be, as of early spring 2023.

The minimum down payment for a conventional loan is 3% for most borrowers, though it can be higher for larger loan amounts. The overall average down payment among home buyers in Washington is closer to 6%. Additionally, some borrowers choose to invest 20% in order to avoid paying mortgage insurance on their loans.

For a median-priced home, here’s what those down payments would look like:

  • 3% down payment (0.03 x $552,398) = $16,571
  • 6% down payment: (0.06 x $552,398) = $33,143
  • 20% down payment: (0.20 x $552,398) = $110,479

Now you can see what a tremendous benefit the VA loan program is, since it allows you to avoid making a down payment altogether. A typical home buyer in Washington would have to spend years saving up for a down payment, especially if they came in at the 6% threshold or higher.

But for those who use a VA loan to buy a house, they only need to save up enough money to cover their closing costs and moving-related expenses. This program can take the down payment requirement out of the picture entirely.

This feature can benefit all types of buyers, but especially those who are buying their first home in Washington. After all, a first-time buyer does not have profits from a previous home sale to put toward their next purchase. So they typically have to save up for the down payment from scratch.

The VA loan program effectively removes this hurdle, allowing first-time buyers to enter the market sooner rather than later.

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Have Questions About This Program?

Sammamish Mortgage specializes in this program and serves borrowers all across the state of Washington. Our knowledgeable staff members can answer any questions you have about using a VA loan to buy a house, or the specific requirements it entails.

We could also pre-approve you for a loan, so that you can enter the real estate market with a specific price range in mind. Please contact us with any questions you have!

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