A Veteran using a VA loan with 100% financing can typically reach break-even in about 2–3 years,
even when the VA funding fee is financed into the loan. Using a $400,000 purchase price and a 4% annual appreciation rate, equity is built mostly through home price appreciation rather than early principal pay-down.  Veterans who are exempt from the funding fee break even even faster, while subsequent-use Veterans with a 3.3% funding fee break even slightly later. VA loans require eligibility, a Certificate of Eligibility (COE), and meeting VA underwriting standards.  If you are Veteran or active duty service member and want to get started today on a VA Home Loan, give VA Loan Officer John Thomas a call at 302-703-0727 or APPLY ONLINE.

Does a 50-Year Mortgage Make Sense for a Veteran Using a VA Loan?

The idea of a VA 50-year mortgage is getting national attention right now, especially as policymakers look for ways to address the housing affordability crisis. While a true 50-year mortgage is not available today,
Veterans are understandably asking how a longer-term mortgage would affect their equity – especially when they are using a 100% VA loan.

In this article, we walk through real numbers to answer one key question:

“If I borrow 100% with a VA loan and finance the funding fee, how long until I can sell without being underwater?”

We will compare three common VA situations on a $400,000 purchase:

• Veteran with a 2.15% VA funding fee (first-time use)
• Veteran exempt from the funding fee (0%)
• Veteran with a 3.3% VA funding fee (subsequent use)

For each, we compare a 30-year VA loan, a conceptual 40-year fully amortizing loan,
and a 50-year fully amortizing loan (for illustration only).

For a deeper explanation of the 50-year mortgage discussion, see our full guide:

50-Year Mortgage Explained

For a complete overview of VA home loans for Veterans, visit:

VA Loans for Veterans

Quick Overview of VA Loan Requirements

A VA loan is one of the best mortgage options available to eligible Veterans, active duty service members, and some surviving spouses.
At a high level, you need:

• Eligible service history (Veteran, active duty, Guard, or Reserve)
• A valid Certificate of Eligibility (COE)
• A home that will be your primary residence
• Acceptable credit and stable income
• Approval under VA and lender underwriting standards

One of the biggest benefits is that VA loans usually require no down payment.
Most buyers finance 100% of the purchase price, and many also finance a VA funding fee
(unless they are exempt due to service-connected disability).

Shared Assumptions for All Three Veteran Scenarios

• Purchase price: $400,000
• Interest rate: 6.25% fixed
• Annual appreciation: 4%
• Real estate commission: 5% of the sale price
• Break-even definition: Net sale proceeds ? Remaining loan balance

At 4% appreciation, the home value grows like this:

• Year 1: $416,000
• Year 2: $432,640
• Year 3: $449,946
• Year 4: $468,029
• Year 5: $486,661

After subtracting a 5% Realtor commission, estimated net sale proceeds are:

• Year 2 net: $411,008
• Year 3 net: $427,449
• Year 5 net: $462,328

Scenario 1: Veteran With Standard 2.15% VA Funding Fee (First-Time Use)

Starting Loan Amount

• Purchase price: $400,000
• Funding fee (2.15%): $8,600 (financed)
• Beginning loan amount: $408,600

Loan Balances Over Time (6.25% Rate)

Break-Even Timing

• Year 2 net sale proceeds: $411,008

Compared to the balances above:

• 30-year VA: Veteran typically breaks even in about 2 years.
• 40-year term: Break-even around 2.1–2.2 years.
• 50-year conceptual term: Break-even around 2.2 years.

Even with 100% financing and the funding fee rolled in, the Veteran usually reaches break-even
in roughly 2–3 years at a 4% appreciation rate.

Scenario 2: Veteran Exempt From the VA Funding Fee Keep Reading...