From the RatesQ team · Sample question

VA loan with zero down: what's the real catch?

This educational scenario and its sample explanations are not posts from real users.

I'm a veteran and my buddy told me I can buy with zero down using a VA loan. Is that actually true for any price home? What are the fees and restrictions I should know about?

Quick Summary

  1. VA eligibility and entitlement affect available financing.
  2. VA loans do not use conventional private mortgage insurance.
  3. A funding fee may apply; the amount and any exemption depend on eligibility.

Sample explanations

From the RatesQ team

It's real. 0% down, no PMI, and competitive rates. The main 'catch' is the VA Funding Fee — for first use with 0% down it's 2.15% of the loan amount (so about $8,600 on a $400k loan). You can roll it into the loan so you don't pay it upfront. If you have a service-connected disability rating, the fee is waived entirely. The other thing is the property must be your primary residence and pass a VA appraisal (which also serves as a condition inspection).

From the RatesQ team

VA loans are genuinely excellent for eligible borrowers. A few clarifications: the funding fee for subsequent use (if you've had a VA loan before) is higher — 3.3% with 0% down. Putting 5% down drops it to 1.5%, and 10%+ brings it to 1.25%. No loan limit for full entitlement since the 2020 Blue Water Navy Act — meaning no ceiling on the loan amount (though lenders still underwrite to the appraised value and your income). The VA appraisal can be stricter than a conventional appraisal, especially for older homes with deferred maintenance. Plan for that in your inspection contingency.

From the RatesQ team

One more thing — VA loans also have a cap on closing costs the veteran can pay (you can't be charged for certain fees). Some sellers resist VA offers because of VA appraisal requirements, but in most markets this isn't a dealbreaker. Strong offer terms can offset any seller hesitation.