If you’re a veteran or active-duty service member looking to buy a home, you might be considering a VA loan. VA loans are a great option for eligible borrowers because they offer many benefits like:
- No down payment
- No private mortgage insurance (PMI)
- Competitive interest rates.
However, if you’re not married and buying a home with a partner, you might be surprised to learn that the VA loan down payment requirement is 12.5%.
Why is the down payment higher for unmarried couples? The VA considers unmarried couples to be a higher risk than married couples. When two people are unmarried, they don’t have the same legal protections, which can make it harder for them to make joint financial decisions and commitments.
The higher down payment requirement for unmarried couples is designed to mitigate this risk. By requiring a higher down payment, the VA is essentially asking unmarried couples to demonstrate that they are committed to the home purchase and are willing to take on more financial responsibility.
It’s important to note that the 12.5% down payment requirement only applies to the portion of the loan that exceeds the VA’s maximum guaranty amount. The VA guarantees a portion of the loan, which can help reduce the down payment requirement for eligible borrowers. However, if you’re buying a home with a partner and your loan amount exceeds the VA’s maximum guaranty amount, you’ll need to come up with a down payment of 12.5% of the difference between the loan amount and the VA’s maximum guaranty amount.
While a 12.5% down payment might seem like a lot, it’s still significantly less than the down payment requirements for many other types of loans. Plus, the benefits of a VA loan, such as no PMI and competitive interest rates, can help offset the higher down payment requirement.
If you’re considering a VA loan and you’re not married, it’s important to factor in the 12.5% down payment requirement when planning your home purchase. Make sure you have enough savings to cover the down payment, and be prepared to demonstrate your commitment to the home purchase to the VA. With careful planning and preparation, you can still take advantage of the many benefits of a VA loan, even if you’re not married.
