Put money down on a VA loan or use that money for upgrades?

That's a difficult question and it really depends on a range of factors such as how long you plan on staying in the house, the actual value planned upgrades will add to the house, and how much you need the upgrades.

An extra bedroom for example will likely add enough in value to the home to cover the cost of building that bedroom. A swimming pool on the other hand will liekly add some value to the home, but not nearly as much as it will cost to build unless you are able to do it yourself.

A third option you might consider is going for a 15 or 20 year mortgage. A 300K loan for 30 years at 4% will cost you 176,965.43 in interest. That same 300K loan would only cost you $70,759.64 if you got a 3.5% interest loan and a 15 year mortgage.

As a realtor, this question is very difficult to answer. Each situation is different. The great thing is, the VA loan is one of the best loans you can use. Two good reasons to have a down payment is to bring down your monthly loan payments, and to lower your VA funding fee. The house you choose will determine whether you should keep the cash you have to apply it towards renovations and or upgrades. So, I think saving up your money is good in so many ways: down payment, renovations, funding fee, or closing costs. It all depends when you are ready to pull the trigger towards home ownership. Cash can always improve your situation, but the VA is backing you up as a Buyer which will allow you to buy with no-money down. How great is that? Happy House Hunting!

Cody,
I'm a mortgage lender licensed nationwide and specialize on VA loans. Depending on the appreciation in your market it may not make sense to wait for the duration of time it will take to accumulate the money you're looking to save for the down payment. As an example if homes are appreciating at a rate of 7% (which is normal) then you need to figure if you can out save what you would otherwise receive in equity through the appreciation. So on a $100,000 home you would earn about $7000 in equity/appreciation in that year time frame. If that is more money than you can save in the same time then it makes sense to buy now. If you can out save that in a year by more than a nominal margin then it would make sense to wait and stash your cash.

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