Should I put 20% down or use a VA loan with 0% down?

It depends on what you'd do with the capital. If you invest the down payment in a diversified portfolio earning 7–10% annually, the compounding growth can exceed the extra mortgage interest you pay on a larger VA loan — especially over 10+ years. This calculator models both paths year by year so you can compare net wealth outcomes for your specific numbers.

What is the VA funding fee and how does it affect this comparison?

The VA funding fee is a one-time charge (typically 2.15% for first-use, 0% down) that can be financed into the loan. It increases your total loan balance and monthly payment. The calculator accounts for this by adding the fee to Path B's loan amount. Veterans with a 10%+ service-connected disability rating are exempt from the funding fee entirely — use the Disability Exemption toggle to model this.

What investment return rate should I use?

The S&P 500 has averaged roughly 10% annually over the last 50 years before inflation, or about 7% after inflation. Conservative investors might model 6–7%; aggressive growth portfolios might assume 9–11%. The calculator lets you adjust from 4% to 14% so you can stress-test both conservative and optimistic scenarios.

Does this calculator account for taxes on investment gains?

Yes. The Advanced Settings include a capital gains tax rate (defaulting to 15% for long-term federal capital gains). The calculator applies this tax to your investment gains at the end of the time horizon to show after-tax portfolio value. Adjust it to match your expected tax bracket — for example, 20% for high earners or 0% if investing in a tax-advantaged account.

Is this strategy only for VA-eligible buyers?

The math applies to any buyer choosing between putting capital toward a down payment versus investing it. However, the VA loan is uniquely suited because it offers true 0% down with no PMI — the only mainstream loan product that allows this without mortgage insurance. Non-VA buyers can still use the calculator by adjusting rates and removing the funding fee.

Free Calculator

Invest vs. Down Payment Calculator

Compare two paths: put 20% down on a home vs. use a VA zero-down loan and invest the freed capital. See which strategy builds more net wealth over 5–30 years — after taxes, extra interest, and the VA funding fee.

← All Calculators Apply Now

VA LoansView loan page

Get Started in 3 Steps

How to Use the Invest vs. Down Payment Calculator

Set Your Home Price & Down Payment

Enter the purchase price and the percentage you'd put down under a traditional loan. The calculator shows the dollar amount freed up for investment under the VA path.

Compare Rates & Returns

Set the traditional mortgage rate, the VA loan rate, and your expected investment return. Adjust the time horizon to see how wealth divergence grows over 5–30 years.

Review the Year-by-Year Breakdown

Open the detailed table to see equity buildup, portfolio value, and net wealth advantage at every interval. The chart visualizes the crossover point where Path B overtakes Path A.

Invest vs. Down Payment Calculator

VA Opportunity Cost Analysis

Home Price

$200K$3.0M

Traditional Down Payment

What you'd put down without VA

530

Rate w/ Down Pmt

VA Loan Rate

0% down

Expected Investment Return

S&P 500 historical avg ≈ 10%

414

Time Horizon

530

Path A · 20% Down

$6,896/mo

Loan: $1,120,000

Path B · VA 0% Down

$9,039/mo

Loan: $1,430,100

Extra monthly cost (Path B)+$2,143/mo

VA Funding Fee (financed)$30,100

Net Wealth Over 20 Years

Path A · 20% Down
Path B · VA + Invest

Portfolio · Yr 20

$1.2M

After 15% cap gains

Extra Interest Paid

$514K

Over 20 years

Net Advantage

+$969K

Path B wins

Year-by-Year Breakdown

Yr	Equity A	Equity B	Portfolio	Wealth A	Wealth B	Δ
0	$280K	$-30K	$280K	$280K	$250K	$-30K
2	$307K	$3K	$320K	$307K	$323K	+$15K
4	$338K	$41K	$366K	$338K	$406K	+$69K
6	$373K	$83K	$420K	$373K	$503K	+$131K
8	$412K	$132K	$483K	$412K	$615K	+$203K
10	$457K	$188K	$556K	$457K	$743K	+$287K
12	$507K	$251K	$641K	$507K	$892K	+$385K
14	$564K	$323K	$741K	$564K	$1.1M	+$499K
16	$629K	$405K	$857K	$629K	$1.3M	+$633K
18	$703K	$498K	$993K	$703K	$1.5M	+$788K
20	$786K	$604K	$1.2M	$786K	$1.8M	+$969K

At 8% annual returns, investing the $280,000 down payment produces $969,420 more net wealth over 20 years than using it for a down payment — even after paying $514,361 in extra interest and 15% capital gains tax on liquidation.

For educational purposes only. Investment returns are not guaranteed and past performance does not predict future results. Actual mortgage rates, tax situations, and investment outcomes vary. This calculator does not account for property appreciation, maintenance costs, or changes in tax law. Consult a licensed financial advisor and mortgage professional before making lending or investment decisions. NMLS #1498678.

Quick Answer

Should I put 20% down or invest the money instead?

If you can access 0% down financing (like a VA loan with no PMI), investing the down payment in a diversified portfolio averaging 7-10% annually can build significantly more wealth than the interest savings from a smaller mortgage — especially over 10+ years.

VA loans: 0% down with no PMI — unique for this strategy

S&P 500 historical average: ~10% pre-inflation, ~7% post

Calculator models both paths year by year

Accounts for VA funding fee and capital gains tax

Works for any buyer — VA is optimal but not required

Time horizon is critical: 10+ years favors investing

Best for: VA-eligible buyers, financially disciplined investors willing to carry a larger mortgage in exchange for portfolio growth

How It Works

Understanding the Invest vs. Down Payment Calculator

This calculator models two wealth-building paths side by side: Path A (traditional 20% down, smaller mortgage, no investment) vs. Path B (0% down VA loan, invest the capital, larger mortgage). It tracks equity buildup, portfolio growth, mortgage balances, and net wealth year by year.

Worked example: Home price: $600,000. Path A: 20% down ($120,000), conventional at 6.50%, monthly P&I: $3,035. Path B: VA loan at 6.75%, 0% down, $120,000 invested averaging 8% annually. VA funding fee of 2.15% ($12,900) is financed. Monthly P&I: $3,980 — $945 more per month. After 10 years, Path A equity: $192,000. Path B equity: $87,000 — but the investment portfolio has grown to $259,000 (pre-tax). Path B net wealth: $346,000 vs. Path A: $192,000. Path B is ahead by $154,000.

The calculator includes Advanced Settings for capital gains tax, property appreciation, and monthly investment contributions. The chart visualizes the crossover point where Path B overtakes Path A.

Ready to apply?

Numbers look right? Explore our VA Loans page for eligibility details, rates, and next steps.

View VA Loans

About This Calculator

What the Invest vs. Down Payment Calculator is For

Most buyers default to 'put as much down as possible.' But for VA-eligible buyers with investable capital, 0% down can be the mathematically superior choice. This calculator models both paths year by year: Path A puts your down payment into home equity; Path B deploys it into a diversified portfolio while financing the full purchase through VA. The chart shows net-wealth divergence over your chosen horizon, accounting for the VA funding fee (financed), the higher monthly payment, capital gains tax on investment liquidation, and the equity buildup difference. Adjust expected returns, tax rates, and time horizon to stress-test the arbitrage.

Common Use Cases

VA-eligible buyers deciding between 0% down and traditional financing
Physicians and high-earners modeling opportunity cost of home equity
Wealth managers evaluating down payment arbitrage for veteran clients

Ready to turn numbers into a loan?

Common Questions

Invest vs. Down Payment Calculator — Frequently Asked Questions

Keep Exploring

Related Calculators

VA Loan & Entitlement Calculator

Calculate your VA entitlement, required down payment, maximum zero-down loan amount, and funding fee

Open

Mortgage Calculator

Estimate your monthly principal & interest payment, compare 15- vs. 30-year terms, and see total interest paid over the life of the loan

Open

Debt-to-Income Calculator

Calculate your front-end housing ratio and back-end total DTI using gross income and all monthly obligations

Open

Refinance Calculator

Model a rate-and-term refinance using your actual loan history. Enter original amounts, rates, terms, and first payment dates to see your true remaining balance, compare it to proposed new terms, and calculate the exact break-even point on closing costs.

Open

View all 16 calculators

Explore Further