California VA Loan Down Payment Requirements for Borrowers

Home buyers in California tend to have a lot of questions about the down payment requirements for VA loans. Surveys have shown that a lot of military members and veterans don’t understand this basic benefit. So let’s correct that!

This guide answers some of the most frequently asked questions relating to down payments, starting with the most important takeaway below.

California VA Loan Down Payment Requirements

The U.S. Department of Veterans Affairs (VA) home loan program helps military members, veterans, and certain surviving spouses achieve the dream of homeownership.

Specifically, VA loans allow home buyers in California to buy a house with zero money down. And that’s a major benefit when you consider the relatively expensive nature of the California real estate market.

Most borrowers who use a VA loan do not have any down payment requirements to worry about. They can finance up to 100% of the home purchase price, even if the price exceeds $1 million.

This feature is what draws many borrowers to the VA mortgage program in the first place. Buyers use it to facilitate a home purchase while minimizing their upfront out-of-pocket expense.

No Down Payment Needed in Most Cases

This is the most important thing home buyers need to know about the VA loan program. Sadly, many eligible borrowers don’t realize they can finance the full purchase prices.

So let’s drive this point home.

As it states on the U.S. Department of Veterans Affairs website, VA-backed purchase loans require “no down payment as long as the sales price isn’t higher than the home’s appraised value (the value set for the home after an expert reviews the property).”

The Department of Veterans Affairs provides mortgage lenders with a guaranty on VA loans. This guaranty acts as a safety net for lenders, protecting them against potential losses in the event of a borrower’s default.

With this guaranty, the government pledges to cover a portion of the loan amount if the borrower fails to make payments. This assurance significantly reduces the lender’s risk, allowing them to offer VA loans without requiring a down payment.

70% of Military Members Don’t Understand This Benefit

In 2023, Realtor.com published the results of a survey with surprising insights relating to the VA loan program. They discovered that most military members and veterans in California and nationwide don’t even realize they can buy a home with zero down payment through this program.

This survey was part of a broader educational campaign to help veterans and military members understand the benefits they’ve earned through their service.

To quote the November 2023 Realtor.com 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.”

Granted, this was a relatively small survey sent out to several hundred military members and veterans nationwide. A larger survey group might have provided better results.

An Ideal Solution in the Pricey California Housing Market

Let’s face it, California can be an expensive place to live. This is especially true in the coastal regions like the San Francisco Bay Area and Southern California.

Because of this, many home buyers seek ways to minimize the upfront costs associated with a home purchase. A California VA loan is one way to accomplish that goal.

Borrowers with full VA loan entitlement do not have a down payment requirement or an official loan limit imposed by the government. As a result, it’s possible to borrow a significant amount of money when using a California VA loan.

We have generated VA jumbo loans up to $5 million in some cases, often without a down payment requirement for the borrower. You won’t find this kind of financing flexibility with any other mortgage program.

California home buyers can benefit from a no-down-payment VA loan in several ways. Mainly, it allows you to buy a home sooner rather than later, by eliminating one of the biggest hurdles along the path to homeownership.

But there are other advantages as well:

1. Affordability

VA loans make homeownership more affordable for many veterans and service members. This is especially true in California, a state that has some of the highest home prices in the nation.

With a median home price of nearly $800,000 in 2024, the California real estate market can stretch home buyer budgets to the limit. The VA mortgage program eases these challenges by greatly reducing the upfront expense.

2. Quicker Homeownership

By eliminating the down payment requirement, VA loans can also accelerate the timeline for homeownership. Borrowers can start searching for homes sooner and move into their own homes more quickly, since they don’t have to save up as much money.

With a conventional mortgage loan (one that’s not backed by the government), a home buyer in California might need to put anywhere from 3% to 20% down. And it can take years for the average earner to save up for that kind of investment.

3. A Wider Range of Homes

Without the upfront cost of a down payment, borrowers might be able to consider a wider range of homes, including larger or more expensive properties. This can open up more options and allow borrowers to find a home that meets their needs and preferences.

Many cities across California suffer from housing market shortages. There simply aren’t enough homes on the market to meet the demand from buyers. With its zero-down-payment flexibility, a VA loan can help a buyer overcome this obstacle by bringing more properties into the affordable range.

Why Some Borrowers Have to Put Money Down

As mentioned above, most borrowers who use this program can finance 100% of the home purchase.

But in certain scenarios a down payment might be required. A person without remaining or partial entitlement who buys a home above the conforming loan limits for their county might have to make a down payment of some kind.

When using a VA loan in California, there are basically two types of borrowers:

• Full entitlement. If you have never used a VA loan before, or if you’ve used one but paid it off through the sale of your home, you should have full entitlement. This means there are no down payment requirements for your California VA loan. Additionally, there aren’t any official loan limits that apply to you.
• Remaining entitlement. If you have an active VA loan that you’re still repaying, or you paid it off but still own the home, you likely have “remaining” entitlement. This means you could encounter a down payment requirement. If you purchase a home below your county’s conforming loan limits, you can finance 100% of the purchase price. But if you buy a house that exceeds your county’s limits, you might have to make a down payment based on the difference.

As you can see, California VA loan down payment requirements can vary depending on the borrower and the situation. For most home buyers, there are no loan limits and no government-imposed down payment requirements.

But for those borrowers with the remaining or “partial” entitlement, a down payment might be needed if the purchase price exceeds conforming loan limits.

Help Us Spread the Word and Educate Veterans

This article is part of a broader effort to educate military members and veterans about their VA home loan benefits. You can help us spread the word and educate veterans in several ways:

• Link to this article from your blog or website
• Share it through your social media accounts
• Create a similar article geared toward your own audience

Military members earn these kinds of benefits through their selfless and honorable service to the nation. As mortgage and real estate professionals, we should do everything we can to help these borrowers understand and take advantage of their benefits.