VA Loans: No Down Payment vs. No Closing Costs
By John “JT” Terry, Mortgage Loan Originator, NMLS #2598209 · Published and updated November 13, 2026.
They are not the same. A qualifying borrower may be able to purchase with no down payment, but that does not automatically eliminate closing costs or other purchase expenses.
Ask for an itemized estimate and an explanation of how your entitlement, funding-fee status, property value, and negotiated credits affect the transaction.
Eligibility is the beginning of the review
A Certificate of Eligibility helps establish your VA home-loan benefit eligibility. You still need to meet applicable credit, income, and other lending requirements. The property and transaction must also qualify. VA home-loan overview.
If you have used the benefit before, ask the lender to review your entitlement rather than assuming the result will match a first-use example. VA’s entitlement guidance explains why a down payment may be necessary in some circumstances. VA entitlement and limits.
Check the funding fee separately
Some borrowers owe a VA funding fee and some qualify for an exemption. Have the lender verify your status. If a fee applies, ask how paying it upfront versus financing it changes the loan balance and cost.
For a VA purchase loan, VA says the funding fee may be financed; other purchase closing charges cannot simply all be added to the balance under that same permission. The funding fee and ordinary settlement expenses are different categories. VA funding fee and closing costs.
Understand credits before counting on them
The seller or builder may agree to cover eligible costs. Ask how the proposed credit is classified under VA rules and what it can pay. VA treats ordinary closing-cost credits and seller concessions differently, so a single blanket percentage can be misleading.
A negotiated credit also needs to appear correctly in the transaction documents. Ask where previously paid expenses and earnest money are accounted for. Do not assume a credit means you will receive an equal cash refund.
Compare the full payment and cash requirement
VA loans do not require monthly mortgage insurance, but taxes, homeowners insurance, and other ownership expenses still need a place in the budget. VA purchase-loan benefits and requirements.
Ask the lender which assumptions support the estimate. If an expected exemption affects property taxes, confirm it with the local authority and ask how timing affects escrow. A future reduction should not be treated as money already available at closing.
Current VA purchase funding-fee tiers
For a borrower who is not exempt, VA lists these purchase-loan funding fees:
Down payment | First use | Subsequent use |
|---|---|---|
Less than 5% | 2.15% | 3.30% |
At least 5%, less than 10% | 1.50% | 1.50% |
At least 10% | 1.25% | 1.25% |
These are funding-fee percentages, not interest rates or APRs. VA identifies exemptions, including qualifying service-connected disability circumstances. Verify the Certificate of Eligibility and exemption status before calculating the fee. VA funding-fee table and exemptions.
VA limits seller concessions to 4% of the home's reasonable value and distinguishes them from ordinary closing-cost credits. Do not apply the 4% cap to every seller-paid cost.
Frequently asked borrower questions
Does zero down mean zero cash at closing?
No. Down payment, the funding fee and ordinary closing expenses are different items. Your estimate should show who pays each charge.
Can I finance all purchase closing costs?
No. VA permits financing the funding fee on a purchase loan; that permission does not extend to all other closing charges.
Does everyone pay the VA funding fee?
No. Some borrowers qualify for an exemption. Have the lender verify your status rather than assuming prior service or a disability claim alone resolves it.
Can I use VA if I have used it before?
Prior use does not automatically eliminate the benefit. Review your Certificate of Eligibility and remaining or restored entitlement; the result can affect down payment and fee treatment.
General mortgage education. Program availability, funding and underwriting require current verification. This is not a commitment to lend or a promise of assistance.
Talk through your purchase with Cat & JT
Cat & JT powered by Success Mortgage Partners are based in Ardmore, Oklahoma, serving Oklahoma, Texas, Kansas and Missouri. For a conversation about your purchase plans, contact Cat Terry, NMLS #1140038, or John “JT” Terry, NMLS #2598209, at 580-226-4282 or through the contact page. Use a secure channel for private financial records.
Powered by Success Mortgage Partners, Inc., NMLS #130562 · Equal Housing Lender · Not affiliated with any government agency. NMLS Consumer Access.
