The Quick Read: You can buy a home with nothing down on a VA loan when you have full entitlement and the price does not exceed the appraised value. Zero down does not mean zero cash, though. You still face closing costs, and several legitimate tools can cover them. The loan carries no mortgage insurance of any kind.
What Does “No Down Payment” Actually Mean on a VA Loan?
It means the lender can finance 100% of the price because VA backs part of the loan. VA’s home loan overview says no down payment is typically required and there is no PMI or MIP. The VA guaranty is what makes that possible. It reimburses the lender for a loss if the loan goes bad, so the lender does not need your cash as a cushion.
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.
There is a catch. Zero down holds only when the price is at or below the appraised value. If the appraisal comes in under your contract price, the gap becomes a problem you must solve.
Here is how the numbers shape up across the VA loan programs Lendmire arranges through wholesale lenders:
- Financing runs up to 100% of the price.
- There is no mortgage insurance.
- With full entitlement, there is no VA loan limit. The wholesale programs serve amounts up to $4,000,000, subject to lender guidelines.
- VA sets no minimum credit score. The wholesale programs start at a 580 decision score.
That last point surprises people. VA has no floor, but lenders set their own, and some set a higher one than others.
If you want the full picture of the program, start with Lendmire’s VA loan programs page. Then come back here for the cash side of the purchase.
How Is a VA Loan Underwritten, Step by Step?
The lender checks your eligibility, your income and debts, and the home’s value, in that order. Each step decides something different. Eligibility decides whether you can use the benefit. Underwriting decides whether you can afford the loan. The appraisal decides whether zero down holds.
Step 1: The Certificate of Eligibility. The certificate of eligibility (COE) is the document from VA that confirms you meet the service requirements. VA sets those rules, not the lender. Check it for any funding fee exemption too. A common problem is an exemption that never gets reflected before closing.
Step 2: Income, debts and credit. Residual income is the controlling test on a VA loan. It is the money left each month after debts, taxes and housing costs, meant to cover family living expenses. Only your actual income counts toward it.
Debt-to-income (DTI) is the share of your gross monthly income that goes to debts. The 41% figure is a guideline, not a cap. A ratio above it draws closer review, and the file generally needs residual income well above the minimum. Many buyers misread this and assume 41% is a hard wall. It is not.
Step 3: The appraisal. A VA appraiser sets the reasonable value and checks the home against VA’s minimum property requirements. The result arrives as a Notice of Value. That document controls. If value lands below your price, you can renegotiate, bring cash for the gap, or walk away. Repairs or waivers are decisions for the lender and VA, not rights you hold.
Step 4: The paperwork. Your lender sends a Loan Estimate early. Later you get a Closing Disclosure. Both are covered below.
Where Does Your Cash Go at a Zero-Down Purchase?
Most of it goes to the funding fee, third-party charges, prepaid items and your earnest money. Here is who typically pays and what can be financed or offset:
| Cost | Who typically pays | Can it be financed? | Can a seller cover it? |
|---|---|---|---|
| VA funding fee | Buyer | Yes | Yes |
| Appraisal | Buyer | No | Yes |
| Credit report | Buyer | No | Yes |
| Title and recording | Buyer | No | Yes |
| Prepaid taxes and insurance | Buyer | No | Yes, counts as a concession |
| Earnest money | Buyer | No | No |
| Home inspection | Buyer | No | Not usually |
Earnest money is a good-faith deposit you put down when your offer is accepted. It usually goes toward your closing costs, so it is not extra money. But you need it in hand before closing, and it sits outside the loan.
The funding fee is worth a closer look. It is a one-time charge paid to VA, not to the lender, and it helps cover the cost of running the program. It is not mortgage insurance. On a purchase, the fee depends on how much you put down and whether you have used the benefit before. It can be financed, meaning you can roll it into the loan.
| Use and down payment | Funding fee |
|---|---|
| First use, under 5% down | 2.15% |
| First use, 5% to under 10% down | 1.5% |
| First use, 10% or more down | 1.25% |
| Subsequent use, under 5% down | 3.3% |
| Subsequent use, 5% to under 10% down | 1.5% |
| Subsequent use, 10% or more down | 1.25% |
Veterans receiving compensation for a service-connected disability, and the other exempt groups, pay no funding fee. VA’s overview confirms the exemption for eligible service-connected disabled veterans and eligible surviving spouses. The exemption covers the fee only. Every other closing cost remains.
A financed funding fee also means your balance ends up above the contract price. Your loan is a bit larger and your starting equity a bit thinner. That is the trade for keeping cash in your pocket.
What Closing Costs Can You Legally Be Charged?
Less than you might fear, because VA limits what a lender can bill you. Under the VA Lenders Handbook, Chapter 8, a veteran can pay:
- The itemized fees VA designates, at reasonable and customary amounts.
- A flat charge by the lender, as the handbook allows.
- Any other costs the handbook permits.
The itemized list includes the VA appraisal fee, recording fees, the credit report, and prepaid taxes and the insurance escrow deposit. Anything outside the permitted list cannot be charged to you. The regulation at 38 CFR 36.4313 says no charge may be made against the borrower other than those expressly permitted. It also bars a brokerage or service charge against the borrower or the loan proceeds except as that rule provides.
That protection is real. But it does not erase costs. The myth that VA loans have “no closing costs” is wrong. The costs exist. Someone has to pay them, and that someone is you unless you arrange otherwise.
Six Ways to Cover Closing Costs, in Order
Work through these from more affordable to most expensive. Not every tool fits every file.
1. Check your funding fee exemption. If you receive disability compensation, confirm the COE shows the exemption. This is the biggest single cost you can remove. If a rating is awarded after closing, a refund may be possible under VA’s process.
2. Finance the funding fee. If you are not exempt, roll the fee into the loan rather than paying cash. You borrow more but bring less to the table.
3. Ask the seller to contribute. Seller concessions are the workhorse tool. The Handbook separates normal closing costs, which carry no VA cap, from a defined list of concessions, which are capped at 4% of the home’s reasonable value. Items that count toward the cap include a seller-paid funding fee, prepaid taxes and insurance, payoff of your debts or judgments, and temporary buydowns. Because the rule hinges on definitions, ask your loan officer how a specific credit will be classified before you write it into an offer.
4. Use a lender credit. A lender can offset some costs in exchange for a different loan structure. The trade is that the cost does not vanish. It moves into the loan terms, so a credit makes the most sense when you do not plan to keep the loan for long. Your Loan Estimate shows how any credit is built in, and pricing is not quoted here.
5. Look at assistance programs. State and local housing agencies sometimes offer closing cost help. Eligibility rules vary, and you should confirm that a program works alongside a VA loan before you count on it. Lendmire’s guide to whether down payment assistance can also cover your closing costs goes deeper.
6. Save, or use allowed gift funds. VA’s own toolkit notes that even with no required down payment, having some savings set aside can help cover closing costs and unexpected expenses. Whether gift funds are acceptable depends on lender guidelines.
A quick rule for choosing between tools. A seller concession lowers the cash you bring without changing your loan terms. A lender credit changes the terms. If the seller will agree, take the concession first. Reach for a lender credit only when the seller will not budge.
How Do You Get a Seller to Help?
Build the request into your offer, and expect to give something back. Sellers in a hot market have little reason to pay your costs. In a slower market they often will.
There are three common structures:
- Ask the seller to pay a stated share of your closing costs and keep the price the same.
- Raise your offer price slightly and ask for a matching credit. This only works if the home still appraises at or above the higher price.
- Ask for a price cut instead of a credit. That lowers your loan, though it does nothing for cash at closing.
Be careful with the second option. It runs straight into the appraisal condition, because zero down depends on the price not exceeding appraised value.
Also keep in mind what you cannot promise. Your agent should not agree to have the seller pay a fee that VA does not allow you to be charged. Let your loan officer check the list first.
Where Does the Zero-Down Rule Break?
It breaks in a few places: reduced entitlement, a low appraisal, and a lender overlay. Each one is a named edge case.
Reduced entitlement. With full entitlement there is no VA loan limit. With partial entitlement, usually because you still have an active VA loan or defaulted on one before, a down payment may be needed on any amount above a limit. VA’s Buyer’s Guide also says you must be able to afford all your VA loans at the same time. The limit depends on the county, so speak with a loan officer rather than guessing. For more on how earlier VA use plays in, see Lendmire’s article on whether a veteran who used a VA loan before can buy with no down payment.
Multiple VA loans. This can work if you have enough entitlement, qualify financially, and occupy the home. It is for a primary residence only.
A low appraisal. If value comes in under price, zero down fails unless the price drops or you cover the gap.
A lender overlay. VA sets no minimum credit score, but a lender may set one. Across the wholesale programs Lendmire works with, the floor starts at a 580 decision score. Some lenders set it higher.
What Does the Closing Disclosure Tell You?
It shows your final terms and your final cash to close. Under the CFPB’s explanation of the Closing Disclosure, the lender must give it to you at least three business days before you close. That window lets you compare final costs to your Loan Estimate.
Check three lines: cash to close, seller credits and lender credits. If something changed that you did not expect, ask before you sign. Certain changes require a corrected disclosure and a new three-business-day wait.
Get Loan Estimates from more than one lender when you can. Comparing them side by side is the simplest way to see where costs differ.
From Preapproval to Keys: Your Cash Checkpoints
1. Get your COE. Confirm entitlement and any exemption.
2. Get preapproved. Share income and debts so the lender can run residual income.
3. Set a cash target. Add earnest money, inspection, the appraisal and prepaids. This is your real number.
4. Make an offer. Decide whether to request a seller concession.
5. Order the appraisal. Watch for the Notice of Value.
6. Review your Loan Estimate and Closing Disclosure. Confirm each credit and cost.
7. Close. Bring the cash to close shown on the final disclosure.
What Are the Tradeoffs of Zero Down?
You trade equity for cash flow. A larger starting balance means less cushion if values dip, and the financed funding fee adds to it. A down payment is optional on a VA loan. Putting money down can lower your loan amount and monthly payment, and a down payment of 5% or more qualifies you for a lower funding fee. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Whether to put money down is a genuine toss-up. If your savings are thin, keeping them for repairs and emergencies often beats a larger down payment. If you have extra cash and plan to stay for years, a down payment can pay off.
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.
Key Terms Defined
Entitlement: The amount of VA guaranty you have available to use on a home loan.
Certificate of Eligibility (COE): The VA document that confirms you meet service requirements and shows your entitlement.
Funding fee: A one-time charge paid to VA on most VA loans, which you can finance and which exempt borrowers do not pay.
Residual income: The money left each month after debts and housing costs, used to test whether you can cover living expenses.
Seller concession: A cost the seller agrees to pay for you, such as prepaids or a funding fee, which VA caps at 4% of reasonable value for defined items.
Notice of Value: The VA appraisal result that sets the home’s reasonable value.
Frequently Asked Questions
Do VA loans require a down payment?
Typically not. With full entitlement, you can finance 100% of the price as long as it does not exceed the appraised value. A lender may still ask for one based on your financial circumstances, and reduced entitlement can require one.
Can I roll closing costs into the loan?
Only the funding fee. You can finance it on a VA loan, but most other closing costs, such as the appraisal, title and prepaids, cannot be financed. You pay them in cash or arrange a seller concession to cover them.
Can the seller pay all my closing costs?
Often yes, if the seller agrees. Normal closing costs sit outside VA’s 4% concession cap. Items like a seller-paid funding fee, prepaids and temporary rate buydowns count toward that cap. Ask your loan officer how each credit is classified.
Do I need good credit?
VA sets no minimum score, but lenders do. The wholesale programs Lendmire places VA loans with start at a 580 decision score, subject to lender guidelines and full file review. Some lenders require more.
What if the appraisal comes in low?
Zero down depends on the price being at or below appraised value. You can renegotiate the price, cover the gap in cash, or walk away. You may request reconsideration of value if you have new evidence. If you ask for that review yourself, you may pay for the second appraisal, which is separate from the regular itemized charges.
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. VA Loan Guaranty Service – Home Loan Overview
2. VA Lenders Handbook, Chapter 8
5. VA Home Loan Guaranty Buyer’s Guide
6. CFPB – What is a Closing Disclosure?
This article is part of Lendmire’s VA loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Cover Closing Costs on a First VA Loan While on Active Duty · Zero Down vs Down Payment on a VA Loan for a Disabled Veteran · How Much a VA Loan Lends With Full Entitlement and No Down Payment
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.