Zero Down

Is a VA loan really zero down?

Short answer

Yes for most eligible borrowers with full entitlement — VA generally finances 100% of the purchase price up to the appraised value. But zero down does not mean zero cash to close. Earnest money, closing costs, prepaids, and the funding fee (if not financed) still need to be funded.

Plain-English explanation

Zero down means the borrower does not bring a down payment toward the principal. It does not mean walking in with $0. Cash to close on a typical VA purchase still includes earnest money (paid earlier), VA-allowed closing costs, prepaid taxes and insurance, escrow setup, and per-diem interest. Seller credits and lender credits can offset many of those line items. The funding fee is usually rolled into the loan unless the borrower wants to pay it in cash.

Practical example

A veteran writes on a $400k Florida home with full VA entitlement and zero down. Cash needed at the table: earnest money already paid ($5k), prepaid taxes and insurance (~$3,500), escrow setup (~$1,200), and lender fees (~$1,500). The seller credited $6,000 toward closing costs. Net cash to close: roughly $5,200 plus the $5k earnest already in escrow.

What can change the answer?

Earnest money, closing costs, prepaids, escrow setup, and the funding fee (if not financed) all hit cash to close even when the loan is zero down.

Your next step

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