For VA loans, what do most lenders require regarding the loan amount?

Most lenders require that the guarantee amount plus any down payment must cover 25% of the purchase price for VA loans. This is based on the VA’s guarantee, which is designed to protect lenders against loss in case of default.

The VA's guarantee allows veterans and active-duty service members to secure loans without a down payment or mortgage insurance, but lenders typically look for a structure where the combined value of the guarantee and any down payment covers at least 25% of the home's purchase price. This provides reassurance to lenders by minimizing their risk, ensuring that they have sufficient coverage in the event of foreclosure.

In contrast, the other options do not align with standard VA loan requirements. Some may assume that a sufficient guarantee alone could be adequate, but lenders typically require that extra assurance to mitigate potential losses. It's also a misconception that a 10% down payment is mandated, as VA loans can often allow for 100% financing, eliminating the need for such a down payment.