The Quick Read: Zero down covers the price of the home, not the costs that come with buying it. You still pay for the appraisal, title work, prepaid taxes and insurance, and the funding fee unless it is waived or rolled into the loan. How much cash that adds up to depends on a short list of variables, and you can estimate it before you make an offer.
Key Takeaways
- “No down payment” means 100% financing of a price that does not exceed the appraised value. It does not mean $0 due at the closing table.
- Your cash to close is built from fees, prepaids and escrow deposits, plus the funding fee if you pay it in cash. Credits and earnest money come off the total.
- The funding fee is the one cost you can usually roll into the loan. That lowers cash at closing but raises the balance.
- Seller credits are negotiated, never automatic, and VA limits how much a seller can contribute.
- An appraisal that comes in below the price is the biggest surprise. You cover the gap in cash or renegotiate.
What “No Down Payment” Actually Covers
Zero down is real. On a VA purchase, you can finance 100% of the price with no mortgage insurance of any kind. With full entitlement (your VA guaranty benefit, confirmed on your certificate of eligibility), there is also no VA loan limit.
VA payment estimate
Starting assumptions reflect an example price with no down payment and a first-use funding fee. Replace them with your own figures.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a VA loan quote.
Illustrative starting assumptions: a $350,000 price, no down payment with full entitlement, a first-use funding fee financed into the loan, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a VA loan quote; your rate is set by the lender at lock. The funding fee follows VA’s published table for the use and down payment entered; the residual-income figure is VA’s guideline for the region and family size, and the rough residual shown subtracts only the housing payment and the debts entered, while VA also deducts taxes, maintenance and utilities. Taxes, insurance and dues are editable estimates; closing costs are not included. Licensed in sixteen states for consumer mortgages. Lendmire is not affiliated with or acting on behalf of the Department of Veterans Affairs.
Here is the catch. Down payment, closing costs and cash to close are three different numbers.
| Term | What it is | VA purchase, typical |
|---|---|---|
| Down payment | Cash toward the price | Often $0 |
| Closing costs | Fees to complete the loan and sale | Still owed |
| Cash to close | What you actually wire or bring | Costs minus credits and deposits |
Plenty of buyers hear “no down payment” and budget nothing else. Then the closing statement arrives. Not fun.
Everything below is about the third row: the real cash number. Lendmire’s VA loan programs place these loans through wholesale lenders, and the same mechanics show up in nearly every file.
Key Terms Defined
Cash to close: The total amount you must bring to closing after all costs, credits and deposits are added up.
Funding fee: A one-time VA charge, based on a percentage of the loan, that helps keep the program running. Veterans receiving compensation for a service-connected disability and other exempt groups do not pay it.
Prepaids: Costs you pay up front for things the lender wants covered in advance, such as homeowners insurance, property taxes and interest from closing day to month’s end.
Escrow deposit: Money set aside at closing so the lender can pay your taxes and insurance when they come due.
Appraised value (reasonable value): The value a VA-assigned appraiser sets for the home. It decides whether zero down works at your price.
Seller concession: Something of value the seller gives you, such as a credit toward your costs.
Entitlement: The amount of your VA benefit available for a new loan.
The Cash-to-Close Formula
Cash to close is simple arithmetic. Add these pieces, then subtract what you have already paid or been credited:
1. Allowed lender and third-party fees.
2. Prepaids and escrow deposits.
3. The funding fee, if you pay it in cash rather than finance it.
4. Minus seller credits.
5. Minus earnest money you already put down.
If the result is positive, you owe it. If it is negative, money comes back to you. That is how the federal closing form treats it, and the federal consumer-finance regulator’s closing disclosure explainer points out that “closing costs” and “Cash to Close” are separate lines. Look at page three of your Closing Disclosure for the real figure.
Down payment does not appear in the formula for a standard purchase, because it is zero. It returns only when the appraisal falls short or your entitlement is limited. More on that shortly.
Where Each Cost Comes From
Not every cost behaves the same way. Some can be financed. Some can be paid by the seller. Some you carry yourself.
| Cost | Can it be financed? | Who can pay it? |
|---|---|---|
| Funding fee | Yes, on a purchase | You, or the seller |
| Appraisal, credit report | Generally no | You, or the seller |
| Title, recording, survey | Generally no | You, or the seller |
| Lender origination charge | Generally no | You, or the seller |
| Prepaids, escrow deposits | Generally no | You, or the seller |
The funding fee is the exception. On a purchase, it can be paid in cash or added to the loan. VA’s own Home Loan Guaranty Buyer’s Guide says exactly that. Ask your loan officer to confirm how your file treats the rest.
Why the fee list is shorter than you might fear
VA does not let lenders charge whatever they like. The rules list the fees a veteran may pay, each at reasonable and customary amounts. Lenders may charge a flat origination fee, capped by VA, that stands in for other origination-type charges. The 38 CFR Part 36 Subpart B text sets that structure. VA’s Federal Register notice on allowable charges explains the purpose: protecting veterans from charges the schedule does not expressly allow.
So VA does not forbid fees. It forbids unlisted ones. You still pay for the appraisal, title insurance, recording and similar items.
The Funding Fee: Pay It, Finance It, or Skip It
The funding fee is the largest single line for most buyers, so it deserves its own look. The figures for a first-time use of the benefit:
- Less than 5% down: 2.15%
- 5% to under 10% down: 1.5%
- 10% or more down: 1.25%. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
For subsequent use, the fee is 3.3% with less than 5% down. The 1.5% and 1.25% tiers stay the same above that. These figures are program parameters and remain subject to lender guidelines and full file review.
Three ways this plays out:
Finance it. Cash at closing drops. The loan balance, and therefore the monthly payment, goes up. Many buyers choose this because cash on hand matters more than the added balance.
Pay it in cash. You keep a smaller loan but hand over more at the table.
Be exempt. If you receive compensation for a service-connected disability, or fall in another exempt group, the fee is waived. Your certificate of eligibility from VA shows this. Exemption removes one line. It does not remove the other closing costs. That surprises people.
A small down payment can also change the tier. Putting down 5% or 10% moves you to a lower fee percentage. Whether that trade makes sense depends on how much cash you want to keep after closing. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Five Buyers, One House
Take one home priced right at its appraised value. The same house produces very different closing-table outcomes, depending on the buyer. This is illustrative, with no dollar figures, because your numbers come from your own Loan Estimate.
| Buyer profile | Fee treatment | Cash to close |
|---|---|---|
| Not exempt, fee financed, no seller help | Rolled into loan | Fees, prepaids, deposits |
| Same buyer, seller credit | Rolled into loan | Noticeably lower |
| Same buyer, pays fee in cash | Paid at closing | Highest of the group |
| Exempt from the fee | None owed | Lower than the first buyer |
| Appraisal below the price | Varies | Everything above, plus the gap |
Look at the first and last rows. The first is the baseline most files start from. The last is where plans break. The distance between them is the appraisal gap, which is the next topic.
When You Need Real Cash Anyway
Zero down is not guaranteed in every situation. Four things can bring a down payment back.
Appraisal below price. The no-down-payment rule applies when the price does not exceed the reasonable value. If the appraiser lands lower, VA’s Buyer’s Guide says you can bring cash for the difference or choose not to buy. Your usual choices are:
- Pay the difference in cash.
- Ask the seller to lower the price.
- Request a review of the value if you have strong supporting comparables.
- Walk away, if your contract allows it.
Partial entitlement. If you used your benefit before and part of it is still tied up, a down payment may be needed on the portion above what your remaining entitlement supports. Lenders also generally want the VA guaranty plus any cash down to reach a set share of the home’s value. How that works depends on your remaining entitlement, so speak with a loan officer. Lendmire’s piece Can a Veteran Who Used a VA Loan Before Buy With No Down Payment? walks through that case.
Lender requirements. VA may not require a down payment, but a lender can. The Buyer’s Guide says as much. Across the wholesale programs Lendmire places VA files with, the decision-score floor starts at 580, while VA itself sets no minimum score. Some lenders set a higher floor, and weaker files may be asked for cash.
Residual income. VA underwriting leans on residual income, the money left each month after major obligations and living costs. The 41% debt-to-income figure is a guideline, not a cap. A ratio above it needs residual income well above the table. A file that falls short can be steered toward a smaller loan, which means cash down.
What If the Seller Will Not Pay?
Plenty of articles on this topic assume a motivated seller. Plan for the opposite.
Seller credits are always a negotiation. No seller has to pay anything, and in a market with many buyers, asking for credits can weaken your offer. Treat any credit as a bonus, not a budget item.
When sellers do contribute, VA caps total concessions at a set percentage of the reasonable value. Ordinary buyer closing costs generally sit outside that cap. Items such as a seller-paid funding fee, prepaid taxes and insurance, paying off your debts, and temporary buydowns generally count toward it. Ask your loan officer for the current limit and how your lender treats it. Some lenders apply tighter limits than VA does.
One more point on credits. If a seller credit is larger than your costs, you generally cannot collect the leftover as cash. It reduces what you owe, and the file limits it to actual costs.
If no credit arrives, your levers are modest but real:
1. Finance the funding fee instead of paying it in cash.
2. Choose a closing date that shortens prepaid interest. A date near the end of the month typically means fewer days of interest to prepay.
3. Shop the third-party services you are allowed to choose.
4. Ask your loan officer which costs can be trimmed.
Rank them by size. The funding fee decision usually moves the most money. The date trick moves the least.
When Cash Is Actually Due
Buyers think of cash as one lump at closing. It is not. Cash leaves your account in stages.
- At contract: earnest money, a deposit that shows you are serious.
- During the loan process: often the appraisal and sometimes a home inspection.
- At closing: the cash-to-close number, minus your earnest money, which is credited back.
- After closing: moving costs, repairs, furniture and the first months in the house.
Earnest money does not vanish. It reduces what you owe at the table. But it is cash you need early, before any loan decision is final. Budget for it separately.
Where the cash comes from matters too. Lenders look at the source of funds. Money sitting in your account is easier to explain than a large new deposit. Gift funds, where allowed, need paperwork. Anything unexplained invites questions and delays. Keep your records tidy before you apply.
Closing-Day Checklist
Your Loan Estimate arrives early. Your Closing Disclosure arrives before signing. Compare the two line by line. The CFPB explainer notes you can ask the lender to explain any significant change.
Before you sign:
- Confirm the cash-to-close line on page three.
- Check that credits and earnest money appear where expected.
- Ask how the funding fee is shown, financed or paid.
- Confirm your payment method and ID requirements.
- Make sure homeowners insurance is in place.
The late-process risks are the appraisal shortfall and a concession overage. Both can shift your cash need near the end. That is why holding a cushion beats running the number to the dollar.
How Much to Hold Beyond Closing Cash
No down payment frees savings for other needs. Directly. But freed savings are only useful if you leave them alone.
A sensible approach: calculate your cash to close, add a margin for an appraisal surprise, then keep a separate reserve for the first months of ownership. Many buyers underestimate what a house needs in its first stretch: small repairs, utilities setup, moving. Treat those as part of the plan.
There is also no monthly mortgage insurance on a VA purchase. That keeps the ongoing payment lower than it would otherwise be, which helps you carry a thinner reserve. It does not replace one.
Common Mistakes
- Budgeting $0 for closing. The funding fee, fees, prepaids and deposits still exist.
- Assuming the seller pays. Credits are negotiated, not owed.
- Assuming financing the fee means “zero” costs. It moves the cost into the balance. It does not erase it.
- Forgetting the appraisal risk. A price above reasonable value turns zero down into cash down.
- Spending the reserve. Closing is not the finish line.
Next Steps
Start with your certificate of eligibility. It shows your entitlement and your funding-fee status, which are the two biggest drivers of your number. Then ask for a Loan Estimate on a realistic price and read the cash-to-close line. Run it three ways: fee financed, fee paid, and with no seller credit.
If you are buying a home and want to see whether a VA loan fits your file, Lendmire can help you compare the options and what each one asks of the file. Buyers pushing into higher price ranges can also read Lendmire’s guide, Can a Veteran Buy a High-Cost Home on a VA Loan With No Down Payment? Every program parameter here is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Frequently Asked Questions
Do I need any cash at all to close on a VA purchase loan?
Usually, yes. Even with zero down, you typically owe fees, prepaids and escrow deposits. The funding fee can be financed or waived, and seller credits can offset other costs. If everything lines up, cash to close can approach zero, but plan on needing some.
Can I roll all my closing costs into a VA purchase loan?
Generally, no. On a purchase, the funding fee is the cost that can be added to the loan. Other costs, such as appraisal, title and prepaids, are paid in cash or covered by a seller credit. Ask your loan officer how your specific file treats each item.
If I am exempt from the funding fee, do I still pay closing costs?
Yes. Exemption removes only the funding fee. Fees for the appraisal, title, recording and similar services remain, along with prepaids and escrow deposits. Your cash to close drops by the fee amount, but it does not disappear.
What happens if the appraisal comes in below my purchase price?
You have options. You can bring cash to cover the difference, renegotiate the price, request a review of the value, or walk away if your contract allows. Zero down applies only when the price does not exceed the appraised value, so a gap turns into cash you owe.
Can the seller pay my closing costs?
Yes, if the seller agrees. It is always negotiated, and VA limits total concessions to a set percentage of reasonable value, with some items counted and others not. Credits only offset real costs. They are not paid to you as cash.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB: Closing Disclosure Explainer
2. VA Home Loan Guaranty Buyer’s Guide
3. 38 CFR Part 36 Subpart B (eCFR)
4. Federal Register: Revisions to Allowable Charges and Fees
This article is part of Lendmire’s VA loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get a VA Loan With Thin Credit and No Down Payment? · Should a Veteran With a Big Down Payment Choose a Conventional Loan? · Does Partial Entitlement Require a Down Payment on a VA Jumbo Loan?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.