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How much does a zero down VA loan really cost?

I'm trying to figure out how much money I will actually need to have on hand to buy a ~$150k house in WA with a zero down VA loan. I understand the funding fee can be rolled into the loan, but what fees can't and how much will they be? Do I need to have a certain number of months worth of PITI in the bank beforehand? etc...
  • April 26 - Central
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Answers (14)

VA loans really can have zero money due at closing. It really depends on how much seller concessions there are, and what rate you go with. Cash to close can either be handled by the lender or the seller, and any experienced VA loan officer can help you navigate how to do that for you based on your short and long term goals. Feel free to reach out to me if you have any questions, and thank you for your service to our country!
  • April 29
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WELL OFTEN on VA loans, you can have the seller pay all of your closing costs too....so get with your real estate agent, and a true loan pro to go over these options for you.....i have seen these get done where you even get your EARNEST money back!! good luck

randy
  • April 28
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0 down VA loans (surprisingly enough) often mean just that.  Sellers can contribute up to 4% of the sales price, which will usually cover the closing costs and pre-paid expenses (does depend on state the home is in and the purchase price).  In addition, lenders can also help cover any expenses not included in the seller paid costs.

My VA buyers typically get money back at closing, rather than bringing money to closing.  If you'd like to discuss your situation in more detail, feel free to contact me through my profile.  I write loans in all states.

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Thanks for your service to our country, and happy home shopping!

Ted
  • April 27
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6186258:

Yes, but it is actually the rate that effects the lender credit and thus the APR. If you paid the closing costs yourself or were able to get the seller to pay for some or all of the closing costs it would look more like [self-promotional hyperlink removed by Zillow moderator, see our Good Neighbor Policy].


Comparing the three scenarios you can see that generally, the shorter the time period you plan on being in the home, the better it is to get in with less cash out of pocket. If you plan on being there a long time the extra money paid at closing will worth it.

Doug
  • April 27
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VA home loans require 0 (zero) down payment.
The buyer has closing costs generally from 2% to 4% of the purchase price of the home

The buyers closing costs can be paid by the seller if negotiated in the purchase contract:
example Seller to pay 3% towards buyers closing costs... this is on a finance addendum in the purchase contract.

The lender can give a credit to cover the closing costs, but this will increase your interest rate.

With good communication between your lender and Real Estate Broker, your financing can be structured in a way that you do not pay out of pocket for your closing costs.
  • April 27
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I bought my first home with a VA loan and was myself surprised when my $0 down VA loan required $8000 from me to close. 

This is a good question for the lender you choose to work with who can help you understand just how much money you'll need for your zero down loan.
  • April 27
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I would ask yourself the last question, not the bank.  Hopefully your own self interest would impose a higher safety threshold than a bank, unless maybe you have a very secure income and are well insured (e.g. disability insurance), or unless maybe now your rent is very high.  My point is, don't let zero down become too much of a lure.

For the rest I would ask a lender familiar with VA.  Not all lenders are.
  • April 26
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@user6186258,

It would be best that you connect with a loan officer about your scenario because giving you a quote on here could mean nothing.  Rates are lower if you did not take a lender credit, but even the lowest rate out there gives you some lender credits.

Speaking to a loan officer directly is free and all of your questions should be answered by the time you finish speaking to a loan officer.

  • April 26
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Thanks for the responses. So does the lender credit affect the rate or the APR? Obviously it affects both but I think you know what I'm saying. If I were to get sellers assistance or pay the closing costs myself or some combination, would that hypothetical rate you gave me still be 4.25 or would it be lower or would it only drop the APR? I'm trying to wrap my head around all this.
  • April 26
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CLICK HERE for a link to a CLICK HERE for a link to a $150K scenario with little to no costs using Friday's rates. (assumes a credit score above 660 and that you are eligible and qualify for a VA loan at this price point).

If the link does not work, here is a picture of the scenario:

If the link does not work, here is a picture of the scenario:


Doug


 
  • April 26
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Profile picture for GMerino

Your correct closing costs cannot be rolled in to the loan but you should be able to ask for lender credits from your loan officer.  The norm for reserves just for your comfort should be two months even though it may not be asked of you. 

Thank you, for your service!

  • April 26
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You can get in for pretty much no cash out of pocket. Two months of payments in the vank or an investment/retirement account (that you can access if needed). You will usually have to write a check for an earnest money deposit but with a credit from a slightly higher rate than market, you can cover closing costs and pre paid taxes and insurance. I am in Kirkland and will. E happy to work up some scenarios for you. Juat click on my profile and shoot me an email or give me a call. Doug
  • April 26
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I just closed a VA loan where the borrower only had to pay the appraisal. The seller gave a concession and I have a lender credit. 
  • April 26
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The Cost depends on the Lender, title company, taxes, insurance, and the rate you chose. You do not need reserves. 
  • April 26
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