The paperwork is the easy part. The confusion usually starts the week you realize a VA loan can put you in a $350,000 house with nothing down, and then three different people give you three different numbers for what it costs.
Here’s the straight version for anyone buying a first home with military service behind them.
What a VA home loan actually gives a first-time buyer
Three things matter more than everything else combined.
No down payment. Most first-timers are scraping together 3% to 5%. On a $350,000 purchase, an FHA loan at 3.5% down demands $12,250 in cash before you’ve bought a single box of dishes. A VA loan asks for $0 down, and there’s no county loan limit holding you back if you have full entitlement.
No monthly mortgage insurance. That same FHA loan carries roughly $160 to $190 a month in mortgage insurance premium, and on most FHA loans it never goes away without a refinance. VA loans don’t have it. That’s real money back in your pocket every month for 30 years.
A one-time funding fee instead. For a first use with nothing down, the fee runs 2.15% of the loan amount. On a $350,000 loan that’s about $7,525, and you can roll it into the loan balance rather than writing a check at closing. Veterans receiving disability compensation are exempt from the funding fee entirely. If that applies to you, that line on your Loan Estimate should read zero, and if it doesn’t, ask why.
Who qualifies, in plain terms
The VA doesn’t set an income ceiling, and it doesn’t require a minimum credit score (most lenders want 620, and a few will go lower with compensating factors). What it does check is your service record:
- 90 consecutive days of active duty during wartime, or 181 days during peacetime
- Six years in the National Guard or Selected Reserve, or 90 days of qualifying Title 32 service
- Surviving spouses of service members who died in the line of duty or from a service-connected disability
- Some surviving spouses who have not remarried
You’ll need a Certificate of Eligibility. Apply through VA.gov and it’s often instant if your DD-214 is already on file. If it isn’t, your lender can usually pull it for you, and it’s worth doing before you tour a single house so you know your budget isn’t theoretical.
The part nobody explains: how much cash you still need
Zero down does not mean zero cash. Closing costs typically run 2% to 5% of the purchase price, so budget roughly $7,000 to $17,500 on a $350,000 home depending on where you live and how the deal is structured. Those costs split into three buckets: lender fees, title and escrow services, and prepaid items like homeowner’s insurance and property tax reserves.
Two things trip people up here. First, a lender advertising “no origination fee” is usually making that money back somewhere else, often in the rate. It’s worth understanding what a zero-fee VA loan really costs you over the full term before you treat it as a bargain. Second, you have more ways to cover the bill than most buyers realize. Family can contribute toward closing costs, and VA gift fund rules are more flexible than most loan programs allow, provided the money is properly documented with a signed gift letter and a paper trail.
There are also down payment and closing cost assistance programs through state housing agencies and nonprofit groups. Many of them fly under the radar because nobody at the closing table gets paid to mention them. If cash is the only thing standing between you and a house, closing cost assistance options for VA buyers are worth twenty minutes of research.
The VA appraisal is stricter than a conventional one
A VA appraisal isn’t just a value opinion. The appraiser also checks Minimum Property Requirements: no safety hazards, a roof with remaining useful life, working utilities, proper access to the property, adequate living space, and no peeling lead-based paint on homes built before 1978. If there’s evidence of termite activity, a wood-destroying insect inspection usually gets ordered too.
This matters because the appraisal can come back “subject to” repairs, and the seller has to agree to complete them before closing. On a competitive house, that’s a real negotiation. It’s also a feature, not a bug: the government is essentially refusing to let you buy a money pit. Expect to pay $500 to $800 out of pocket for the appraisal, and expect it to take a little longer than a conventional one.
Ask the seller for money instead of a price cut
Here’s the trick experienced VA buyers use. Instead of negotiating $10,000 off the price, ask for $10,000 toward your closing costs. The seller nets roughly the same amount, and you keep your savings account intact. VA rules allow sellers to cover your closing costs, prepaids, and discount points, and there’s a separate allowance for concessions capped at 4% of the loan amount.
This works best when the seller has equity and the market isn’t scorching. In a bidding war the seller will take the cleanest offer, so it pays to understand how seller concessions are structured on a VA purchase before you write the offer, not after the inspection response.
Picking a lender who won’t pad the bill
Not every lender treats VA loans the same way. Some specialize in them and know exactly which underwriters will accept a nontraditional credit history or a self-employed borrower with two years of returns. Others tack on a 1% origination fee and call it a convenience charge.
Get Loan Estimates from at least three lenders on the same day, same loan amount, same closing date. Compare the box labeled “Total Loan Costs” rather than the interest rate alone, because a lender can buy your rate down with fees and make the headline number look prettier. If you’re considering one of the big military-focused servicers, this plain-English breakdown of how Veterans United structures its first-time VA loans is a useful benchmark for what a fair deal looks like.
Five mistakes that cost first-time VA buyers money
- Opening a store card before closing. A new account or a financed truck can move your debt-to-income ratio enough to change your approval.
- Skipping the funding fee exemption. If you have a service-connected disability rating, confirm it’s applied. Nobody will volunteer it on your behalf.
- Ignoring the occupancy rule. You’re expected to move in within a reasonable time, generally 60 days. Buying as an investment property is a different loan.
- Letting the seller pick the title company. Shop it yourself. Title and settlement fees vary by hundreds of dollars for identical work.
- Waiving the inspection to win a bid. The VA appraisal is not a home inspection. Pay the $400 and get a real one.
Your first 45 days, realistically
Week one: pull your Certificate of Eligibility and get pre-approved, not pre-qualified. Week two through four: tour homes and write offers, knowing a VA offer in a hot market may need a cover letter and a flexible closing date. Days 25 to 35 are usually the appraisal window. Days 35 to 45 are title, insurance, and the final walkthrough.
Start the process with a savings cushion of about 2% of your target purchase price, a pre-approval letter in hand, and a clear picture of which costs the seller might absorb. That combination puts you in a stronger position than most first-time buyers walking into the same open house with a conventional loan and a 5% down payment they’re still saving for.