I'm buying a house and debating between a 10% down payment or no down payment.
I plan to invest the saved down payment (10%) in dividend-paying funds (around 4%, and appreciation of the funds) to make up for the higher monthly payment from putting down 0% on the VA loan.
While I understand this approach sacrifices some potential return (2% difference between the mortgage rate and the dividend yield), I prioritize keeping that money readily available. I am a disability recipient and exempt from the VA funding fee.
Thoughts on this strategy? Thanks in advance.
VA Loan – How much to put down?
byu/vinotinto5 inMilitaryFinance
Posted by vinotinto5
3 Comments
put as much down as you can, unless you want a high monthly mortgage bill.
I like your approach. Have lots of expenses right after buying a house, so will need money for that. Let’s you have the money to personalize the house. After a bit, if you decide you don’t need it anymore, can just pay the remainder towards your mortgage. Won’t decrease your payment, but will save you on interest. This all assumes the higher monthly payment isn’t an issue.
What does the rest of your financial life look like? When you say a dividend fund, what do you mean? If you want money to be available in the short term a high dividend ETF is still a bad choice as it can lose value. If this is a short term decision or an emergency fund, Cash is paying over 4% right now.