How to Save for a Down Payment During Military Service
Updated: 3 days ago
A VA loan lets many service members buy with no down payment. But some families still choose to put money down, and almost everyone needs cash for closing costs, moving and a cushion. As a military spouse for more than 30 years and an Arlington Associate Broker with 560+ transactions, I've seen how much easier ownership is when families arrive with savings.
This article is general information, not tax, legal or financial advice.
Why put money down with a VA loan?
A lower funding fee. For first-time VA use, the funding fee drops from 2.15% to 1.5% with 5% down, and to 1.25% with 10% down. Veterans who receive VA disability compensation are exempt.
A smaller loan and payment.
Equity from day one, which helps if you need to sell after a short tour.
If you're using a conventional loan, putting less than 20% down usually means paying private mortgage insurance.
Five ways to build savings
1. Set a target. Add your down payment, closing costs, moving costs and an emergency fund. My cost of ownership guide can help.
2. Automate it. Use a separate savings account and an allotment, so the money moves before you see it.
3. Save extra pay. Bonuses, special pays and tax refunds can go straight to savings.
4. Keep housing costs below your BAH where you can, and save the difference. My BAH guide explains how BAH works.
5. Pay down high-interest debt. It helps both your savings and your loan approval.
What about TSP?
Be careful here. The penalty-free first-home withdrawal of up to $10,000 applies to IRAs, not to TSP. A TSP hardship withdrawal before age 59½ may carry a 10% early withdrawal penalty plus income tax, and buying a home isn't a listed hardship.
TSP does offer a primary residence loan:
$1,000 minimum and up to $50,000, depending on your balance.
Repaid over 61 to 180 months through payroll deductions.
A $100 fee.
Only for buying or building your main home, with documentation.
A TSP loan doesn't trigger taxes if you repay it, but the money isn't invested while it's out, and leaving service can make the balance due. Talk to a financial counselor before you borrow. Your installation's personal financial counselors are free.
In Northern Virginia
Prices here mean closing costs and cash reserves add up. Ask your lender for a Loan Estimate early, and see my VA closing costs guide for local costs.
Sources: VA funding fee; TSP loans; TSP in-service withdrawals; IRS Topic 557; Fannie Mae, private mortgage insurance.
Last reviewed: October 2026
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