$0 Down VA Loan? Read This First.

Zero down. No mortgage insurance. For a lot of Denver veterans, that's where the VA loan conversation ends.

It shouldn't. $0 down is only part of the story. The funding fee, your entitlement, residual income and the rules on seller credits can change what you pay and what you can buy.

Here's what to know before you make an offer.

What a VA Loan Gives You

The big three, straight from the VA:

• No down payment, as long as the sales price isn't higher than the home's appraised value.

• No monthly mortgage insurance. No PMI, no MIP.

• Fewer closing costs, some of which the seller may be able to pay.

Most VA loans are made by private lenders and backed by the VA. That means your lender sets your interest rate, discount points and closing costs. Compare lenders like you would for any other loan.

The Funding Fee

The VA funding fee is a one-time charge, and it's a percentage of the loan. For a purchase, the rates are:

(These are the current VA purchase funding-fee rates.)

Here's an illustrative example on a $500,000 purchase with nothing down, first use: 2.15% is $10,750. On a subsequent use, 3.3% is $16,500. Put 5% down, and the fee on the $475,000 loan is $7,125.

You can finance the funding fee into the loan. It's the only fee on a purchase that you can. Everything else is due at closing.

Some buyers don't pay it at all. The VA lists these exemptions:

• Veterans receiving VA compensation for a service-connected disability

• Veterans eligible for that compensation who receive retirement or active-duty pay instead

• Surviving spouses receiving Dependency and Indemnity Compensation

• Service members with a proposed or memorandum rating showing eligibility, before closing

• Active-duty members who provide evidence of a Purple Heart on or before closing

If you might qualify, tell your lender early. A refund may be possible if compensation is awarded with an effective date before your closing date.

Entitlement: The Part People Miss

Entitlement is the part of your VA benefit that backs a loan. It can affect how much you can borrow.

With full entitlement, there's no VA loan limit. You still have to afford the payment, and the appraisal still has to support the price.

With remaining entitlement, a county limit applies. VA calculates it by taking 25% of the county's one-unit loan limit and subtracting the entitlement you've already used. VA's limits match FHFA's, and the 2026 baseline is $832,750. Some counties are higher.

That matters if you've used your benefit before and still own that home, or haven't had your entitlement restored. Ask your lender to run your numbers.

Residual Income: VA's Own Test

VA doesn't only look at debt-to-income ratio. Its standard DTI is 41% or less, and ratios above it can still work with a strong justification. VA also looks at residual income: what's left each month after your major obligations and living costs.

The residual income guidelines depend on your region, loan size and family size. They're based on government spending data. A lender reviews them with compensating factors like long-term credit or significant assets.

Strong residual income can help a higher DTI. Thin residual income can be a problem even when your DTI looks fine. Ask your lender how they calculate it.

Living There: The Occupancy Rule

A VA loan is for your home. VA says you'll live in the home you're buying with the loan. This isn't the loan for an investment property.

Seller Credits Have a Cap

Sellers can help with your ordinary closing costs, and VA doesn't limit credits for those costs. But VA limits seller concessions to 4% of the home's reasonable value, as shown on your Notice of Value. Concessions include credits for the funding fee, debt payoff, or prepaying hazard insurance.

On a home with a $500,000 reasonable value, that's up to $20,000. Keep that in mind when you write your offer.

VA vs. FHA vs. Conventional

• VA: no down payment, no monthly mortgage insurance, a one-time funding fee unless you're exempt.

• FHA: a low down payment, with FHA mortgage insurance.

• Conventional: with less than 20% down, you'll usually pay private mortgage insurance.

The best loan is the one with the best total cost for you. A VA loan often wins for eligible buyers, but not automatically. Compare the payment, the cash to close and the long-term cost side by side.

The Better Question

Instead of asking:

"Can I buy with $0 down?"

Ask:

"What does a VA loan cost me, and what does it let me buy?"

FAQ

Do I need a down payment for a VA loan? Not necessarily. VA says no down payment is required as long as the price isn't higher than the appraised value.

Is there mortgage insurance on a VA loan? No. There's no PMI or MIP, but there's a funding fee unless you're exempt.

Can I use a VA loan more than once? Yes. The VA home loan benefit can be used more than once. If you still have another VA-backed loan, your remaining entitlement and the county loan limit may affect how much you can borrow without a down payment.

Can I use a VA loan for an investment property? Not as a pure investment property. You must intend to occupy the home, although VA financing can be used for certain multi-unit properties when you live in one of the units.

About Jennifer

Jennifer Chicano, CMA™, is Your Loan Chic — a Certified Mortgage Advisor™ and mortgage broker helping buyers make informed mortgage decisions. NMLS #1194079 | Zero Point Mortgage Services NMLS #1216108.

Using your VA benefit in Denver? I'll walk you through what it will cost and what you can buy.

Schedule a Mortgage Strategy Call

Information is for educational purposes only and is not a commitment to lend or financial advice. Program terms, fees, loan limits, eligibility and underwriting requirements change and vary by borrower, lender and property. Information is current as of October 2026. Examples are for illustration only. All loans are subject to credit approval, program guidelines and underwriting requirements. Your Loan Chic is not affiliated with or endorsed by the U.S. Department of Veterans Affairs.