Do I need a down payment on a VA home loan?

 

In most cases, no down payment is required:

• VA allows the loan to go up to 100% of the home’s reasonable value (the value on the VA appraisal / Notice of Value). Benefit

• No down payment is required by VA unless:

  • The purchase price is higher than the VA appraised value, or

  • You’re using certain specialty products (like GPMs), or

  • You don’t have enough remaining entitlement and the lender needs a down payment to meet secondary market rules. Benefit

So a typical first-time VA buyer with full entitlement can buy a home with 0% down, as long as the numbers and the property meet VA and lender guidelines.

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If there’s no down payment, what are my other costs?

Even with 0% down, most VA buyers see three buckets of costs:

1. Standard closing costs (typically ~3–5% of the purchase price or loan amount) 

   • Appraisal

   • Credit report

   • Title insurance & settlement

   • Recording fees, lender fees, etc.

2. Prepaids and escrows

   • Prepaid interest (from closing date to month-end)

   • Initial deposits for taxes and homeowners insurance

   • Sometimes HOA dues

3. VA funding fee (unless exempt)

   • A one-time fee that helps keep the VA program running.

   • For first-time use with less than 5% down, the current standard funding fee is 2.15% of the loan amount.

   • Many Veterans can roll it into the loan instead of paying it in cash. Veterans Affairs

Veterans receiving VA disability compensation, certain surviving spouses, and some other groups are exempt from the funding fee — which can save thousands of dollars. 

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What are VA seller concessions (and how are they different from closing costs)?

VA gives you a powerful negotiation tool: seller-paid costs and concessions.

Two separate “buckets” matter here:

1. Seller-paid closing costs

   • The seller can pay all of your allowable closing costs, and VA does not cap this amount. 

2. Seller concessions (capped at 4%)

   • On top of that, VA limits seller concessions to no more than 4% of the home’s reasonable value (typically very close to the purchase price). 

   • Concessions are “extras” beyond normal closing costs, such as:

     • Paying your VA funding fee

     • Paying off other debts to help you qualify

     • Prepaying taxes and insurance

     • Interest-rate buydowns (temporary or permanent)

     • Certain gifts or HOA fees

That’s the key:

The seller can pay your normal closing costs without any VA percentage cap, plus up to 4% of the home’s value in “extras.”

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Example: $350,000 VA purchase with full seller concessions

Let’s run a simple, ballpark scenario for illustration only. Actual numbers will vary by state, taxes, and lender.

Basic assumptions

• Purchase price: $350,000

• Veteran has full VA entitlement and uses 0% down

• Standard closing costs: estimate 4% of purchase price ≈ $14,000 (within the common 3–5% range) 

• Seller agrees to:

  • Pay all standard closing costs, plus

  • Offer maximum VA concessions (4%)

4% VA concession limit

• 4% of $350,000 = $14,000

So the seller is potentially covering:

• $14,000 of standard closing costs (no VA cap), plus

• $14,000 in VA-allowed concessions

Total possible seller help in this example: $28,000.

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Case 1: First-time use, not exempt from the VA funding fee

Step 1 – Base loan and funding fee

• Base VA loan (no down payment): $350,000

• First-time use, <5% down → 2.15% funding fee

• Funding fee = 2.15% × $350,000 = $7,525 

If you roll the funding fee into the loan:

• Final loan amount ≈ $357,525

• Out-of-pocket, you still need closing costs and prepaids — unless paid by others.

Step 2 – Apply seller help

Using our example structure:

• Seller pays $14,000 in standard closing costs (appraisal, title, origination, etc.).

• 4% concession bucket = $14,000. That can be used for things like:

  • $7,525 to cover the VA funding fee

  • $3,000 toward prepaid taxes and homeowners insurance

  • $3,475 toward paying down credit cards or an auto loan to improve DTI

In that scenario, a Veteran could realistically:

• Bring little to no cash to closing (depending on exact fees and prorations), and

• Walk away with:

  • 0% down payment

  • Funding fee fully covered by the seller

  • Some or all prepaids and even a chunk of other debts paid down

That’s the core power of combining no down payment + seller-paid closing costs + VA seller concessions.

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Case 2: Veteran is exempt from the VA funding fee

Now let’s assume the same $350,000 purchase, but the Veteran is funding-fee exempt (for example, due to receiving VA disability compensation). MyArmyBenefits

Changes:

• No VA funding fee at all

• Loan amount stays at $350,000 with 0% down

• Seller can still:

  • Pay $14,000 of standard closing costs, and

  • Provide $14,000 in concessions

Where can that $14,000 concession bucket go now?

• Prepaid taxes and insurance (escrows)

• Interest-rate buydown (to permanently or temporarily lower your payment)

• Debt payoff (credit cards, auto loans, small collections, etc., within VA limits)

• Certain HOA fees or closing “extras”

Net effect:

• You keep even more cash in your pocket, without funding fee drag on the loan,

• And you potentially walk into the home with very little or nothing out-of-pocket — plus a cleaner monthly budget if some debts are paid off.

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Big picture: What should a VA buyer plan for?

When you’re planning ahead:

• Down payment:

  • Often $0 required with full entitlement and appraised value support. Benefits

• Closing costs:

  • Plan on 3–5% of the purchase price in total costs — then work with your lender and agent to negotiate seller credits to offset them. 

• Seller help:

  • Aim (where the market allows) for:

    • Seller pays all allowable closing costs, plus

    • Up to 4% of the value in concessions earmarked for:

      • Funding fee (if not exempt)

      • Prepaid taxes/insurance

      • Rate buydowns

      • Strategic debt payoff

Every market and contract is different, and VA rules are detailed — but when structured correctly, a VA offer can legitimately get you:

• No down payment

• Minimal out-of-pocket closing costs

• Improved monthly cash flow if concessions are used to lower your rate or debts

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Final thoughts

If you’re a Veteran or active-duty service member and you’re wondering,

“Can I really buy a home with no down payment — and how much cash do I actually need?”

the honest answer is: with a well-structured VA loan and a cooperative seller, your upfront cash can be far lower than most people think.

If you’d like to see what this looks like with your numbers (your price range, your debts, and whether you’re funding-fee exempt), I can put together a simple breakdown for you and, if you’re ready, help you get pre-approved so you know exactly what to expect at the closing table.

About the Author
Nate Carver – Mortgage Loan Officer
Premier Lending, Inc. – NMLS #130562
LO NMLS #2004738

Licensed in TX, FL, AL, TN, CO
Equal Housing Opportunity.

If you’re a Realtor and want talking points, co-branded material, or a quick Zoom to walk through this data for your market, let’s schedule a time—and let’s see who in your database is ready to get back in the game.

About Between Two Doors

Between Two Doors is a podcast where Nate talks to Realtors and other influencers in the communities that he serves as a mortgage loan advisor.  He has conversations about the guest's journey, aiming to connect home buyers and sellers with Realtors on a more personal level. He ask "right brain" questions that go beyond transactions, focusing on the experiences, values, and passions that make these professionals great at what they do.

Listen to more episodes at: https://www.betweentwodoors.com

Sponsored by:
Premier Lending, Inc.
https://www.natecarver.com

NMLS Numbers:
NMLS: 2004738
Licensed by the Department of Financial Protection and Innovation (DFPI). Equal Housing Opportunity.
https://www.nmlsconsumeraccess.com

Contact: 972-832-5761