Saving for a house on military pay: what actually needs saving.
The VA loan removes the down payment and the mortgage insurance. It does not remove earnest money, the appraisal, the inspection, or the closing costs a seller declines to cover. Here is what to save for, and where to keep it while you do.
What the VA loan removes
VA-backed loans require no down payment and carry no monthly mortgage insurance. The one VA charge is the funding fee, a one-time percentage of the loan that most buyers finance into the loan rather than pay at closing. It is waived for borrowers receiving VA compensation for a service-connected disability, for those eligible for it but drawing retirement or active-duty pay instead, for DIC surviving spouses, for members with a qualifying pre-discharge rating, and for Purple Heart recipients on active duty. Our funding fee calculator runs the 2026 chart.
Source: VA, funding fee and loan closing costs. va.gov
What you still pay for
- Earnest money with the offer, credited back at closing.
- The VA appraisal and any inspection you order.
- Closing costs: the VA says buyer and seller can negotiate who pays items like the appraisal, credit report, title, and recording fees. The VA also allows sellers and builders to offer credits that cover some or all of the buyer's closing costs, and lender credits are common. Ask for both before you assume you are paying them.
- The move and the first month: deposits, utilities, and the repairs a listing did not mention.
- A cushion after closing. Not a VA requirement, but lenders like to see it, and so will you.
Source: VA, funding fee and loan closing costs, "Can the seller pay for my closing costs?" va.gov
Where to keep it while you save
Insured and liquid. The FDIC national average savings rate was 0.38% as of August 1, 2026, and several military-affinity credit unions and USAA publish rates well above it on their own pages. Savings Watch carries a table of those published rates, read at each institution on September 1, 2026, alphabetical, with the conditions attached to each. It is a list of facts, not a recommendation, and the link is always the source.
Why the TSP is the wrong piggy bank
The TSP does offer a primary residence loan, repaid to your own account at the G Fund rate (4.875% when this page was written) with a one-time $100 fee. The cost the TSP itself points to is the compounding you give up while the money is out. It is a tool of last resort for a purchase, not a savings plan for one. The TSP guide goes deeper.
Source: Thrift Savings Plan, TSP loan basics. tsp.gov/loan-basics
Deployed? There is a dedicated program
Members deployed to a designated combat zone can use the Savings Deposit Program run by DFAS, which pays a fixed rate on deposits up to a cap for the length of the deployment. The terms live on the DFAS page and change with policy, so read them there before counting on the number.
Source: Defense Finance and Accounting Service, Savings Deposit Program. dfas.mil
What the savings buys
Once you know the cash you can bring, the affordability calculator turns base pay, BAH, and what you already owe into a price at the VA's 41% guideline and at a comfort ratio you choose. Enter the down payment you actually have, even if it is zero. The Home Buyers Guide and the VA Loan Guide carry the rest of the process.
Quick answers
Do I really need any savings with a VA loan? The VA loan removes the down payment and mortgage insurance, not the rest. Earnest money, the appraisal, any inspection, closing costs the seller and lender do not credit, and the move itself are still cash. The VA allows seller and builder credits for closing costs, so ask.
Can I use my TSP for the down payment? A TSP primary residence loan exists, repaid to your own account at the G Fund rate with a $100 fee. The TSP's own guidance is to think twice: the real cost is the compounding lost while the money is out.
Where should the house fund sit? Somewhere insured and liquid. Savings Watch lists the savings rates military-affinity institutions publish, read at the source with the date, so you can compare them yourself against the FDIC national average.
Sources
- VA, Funding fee and loan closing costs: va.gov
- Thrift Savings Plan, TSP loan basics: tsp.gov
- FDIC national average savings rate via FRED, as of August 1, 2026, on Savings Watch
- DFAS, Savings Deposit Program: dfas.mil
Every figure above was read at the linked source on September 1, 2026. Educational information for the whole military community, not advice for your situation. StandWatch is not the VA, DoD, or a lender.
