No Down Payment Does Not Mean No Savings Needed
Jeanette Spain
21-year Air Force veteran. Central Texas Realtor.
The short answer
A VA loan with full entitlement requires no down payment. That is real money — $40,000 to $80,000 you don't have to bring on a typical Central Texas purchase. But confusing "no down payment" with "no cash needed" is how buyers show up to closing short. Here is what you actually need in the bank.
What the VA loan eliminates
A VA loan with full entitlement requires no down payment and no private mortgage insurance. On a $400,000 purchase, that is $20,000 to $80,000 you don't have to bring depending on what a conventional lender would have required. Both are significant advantages that materially change what it takes to get into a home. The VA benefit is real. But the loan still has costs.
What you still need to have available
- Option fee: $100–$250, paid to the seller, non-refundable. Credits at closing.
- Home inspection: $400–$600, paid to the inspector. Not refundable.
- VA appraisal: $600–$700, paid through the lender. Required. Not refundable.
- Earnest money: 1% of purchase price, held by title company. Refundable during option period, credits at closing. At risk after option period ends.
- Closing costs: if the seller doesn't cover them, typically 2–3% of the loan amount in lender fees, title, and government charges
- Prepaid expenses: first-year homeowner's insurance, 2–3 months of property taxes into escrow, prepaid interest from closing date to month end
In a buyer-favorable market, a motivated seller will cover closing costs and prepaids as a concession. I've closed VA purchases where the buyer brought under $2,000 to the table — just option fee, inspection, and appraisal. That requires a willing seller and a well-structured offer, but it's achievable and more common than people think.
The reserve question most people skip
After closing, you need reserves. First mortgage payment (usually due 30–45 days after closing). Utility deposits if you're moving from a base where utilities were covered. Any immediate repairs the inspection flagged but you accepted. Furniture or appliances if the house is unfurnished. Most VA lenders don't require documented reserves the way some conventional programs do, but having 2 months of mortgage payment in the bank after closing is a reasonable floor.
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