How One Veteran Bought a Home in a Million-Dollar New York Neighborhood 

Last year, 34-year-old Joe Brown from Huntington, NY, decided it was time to stop renting.

As a dad to three kids under 5, he and his wife were running out of space, and he wanted a more stable home for his family.

They decided they wanted to settle down in the same place they grew up. The problem? The median listing home price was $932,000, though plenty of homes for sale in town were listed for well over a million dollars (and still are).

"We didn't have 20 percent saved up, and, in New York on Long Island, that was an unrealistic expectation for us to have available," Brown tells Realtor.com®.

However, as a member of the U.S. Navy, he was eligible for a VA loan, a mortgage option available to veterans, current service members, and their spouses. And having access to that loan made all the difference.

VA Loans offer no down payment options

"VA loans have not required a down payment since the benefit’s creation in 1944 as part of the original GI Bill," says Chris Birk, vice president of mortgage insight at Veterans United Home Loans. "Zero down payment reduces the biggest barrier most first-time buyers face, which is affordability."

The NAR Profile of Home Buyers and Sellers found that the median down payment percentage for a first-time homebuyer with a conventional loan was 12%—but 74% of first-time homebuyers using VA loans made a 0% down payment, needing only to cover standard closing costs

Meanwhile, a conventional first-time buyer with a 12% down payment must bring $51,600 in cash before even counting those same closing costs.

If a first-time homebuyer sets aside 15% of their annual gross household income, it would take about 4.4 years for a household with a typical gross income of $78,700 to save enough for a conventional down payment, according to the report. That was time and money that the Brown family just did not have.

"Without the VA loan, home ownership would have been out of reach for my family for several years," says Brown. "It was the only reason we could afford to buy a house."

Additional VA loan benefits

But zero down payment isn't the only benefit that the VA loan provides.

Borrowers with VA loans don’t have to pay private mortgage insurance (PMI), Birk notes, because the Department of Veterans Affairs backs a portion of the loan—typically maintaining a 25 percent guaranty.

"PMI would have been upwards of $500 a month for us, so that was a huge savings," says Brown.

Borrowers can save on closing costs with a VA loan, thanks to fee limits and rules that let sellers contribute substantially.

"There are limits on what borrowers can be charged in fees," says Birk. "Homeowners can also negotiate for the seller to cover all loan-related closing costs and up to four percent in additional concessions for things like prepaid taxes and insurance."

VA loans, which are financed by private lenders like mortgage companies and banks, typically have more competitive rates than a traditional loan.

"Historically, VA loans have some of the lowest rates on the market," says Birk.

Since 2020, the interest on a VA loan remains about 0.3–0.5 points lower than the Freddie Mac benchmark.

"Freddie Mac’s 30-year fixed is 6.22%, up roughly 3 percentage points from around 3% in 2020," says Birk. "VA 30-year locks are about 5.84% today, also up roughly 3 points from 3% in mid-2020."

VA loans also tend to offer a smoother path to qualification. At Veterans United, the minimum qualifying score is typically 620—but VA underwriting also looks beyond a single credit score.

"VA also allows high loan-to-value purchase financing and supports approvals with higher debt-to-income ratios when residual income is strong," says Birk.

In addition, borrowers can pay extra or pay off a VA loan early without a prepayment penalty, which is another big advantage.

The difference a VA loan can make

Brown appreciates that his service to the country allowed him to secure a VA loan.

"When I entered the Navy 12 years ago, I wasn't thinking about VA loans, but finding out about what it unlocks was an amazing opportunity and an incredible bonus," he explains.

The VA loan was built to widen the path to homeownership, which Brown says has already changed his life.

"It gives us more stability," he says. "I've been renting all my life up until now. Owning a home gives me a sense of comfort and pride."

Brown says he'd recommend VA loans to other service members and veterans without hesitation.

"It would be hard for me to imagine a veteran who was eligible would go a different route," he says. "It's such a huge advantage."