VA Home Loans
Zero down. No monthly mortgage insurance. And VA interest rates are often more competitive than conventional financing.
That combination can do more than get you into a home with less money upfront. It can let you keep more of your savings available for the move, repairs, emergencies or simply life after closing.
And if you already have money saved, that doesn’t automatically mean you should skip VA or put all of it down. The rate, funding fee, monthly payment, cash you keep and the rest of the purchase all matter.
I’m Blake Overton, a Mortgage Loan Originator / Producing Branch Manager with Gershman Mortgage. I work with homebuyers throughout Iowa. My goal here is to show you where the VA benefit is genuinely valuable, where the details matter and what I’d want you to understand before choosing the loan.
About Blake · 319-538-4647 · blake@clearmortgageplan.com
Explore your VA benefit
Who Qualifies for a VA Home Loan?
VA home loans are available to eligible veterans, active-duty service members, certain National Guard and Reserve members, and some surviving spouses.
Eligibility generally comes down to your military service history. If you’re unsure whether you qualify, I can pull your Certificate of Eligibility, or COE, and help you figure that out. From there, we can look at how much home you can qualify to buy.
Your COE confirms the VA benefit. It is not the same thing as mortgage approval. Your income, credit, debts and the home you’re buying still have to meet the loan requirements.
Don’t have your COE? No worries. I can get it for you. If VA needs additional information, I’ll let you know what’s needed. You don’t need it in hand to start a conversation.
VA sets the program rules, but lenders and the investors behind their loan programs can have additional requirements. Credit score is a good example: VA itself does not set a minimum credit score, but a lender can.
A VA purchase loan is also for a home you plan to live in. It isn’t a financing program for a vacation home or a property you’re buying only as a rental.
How Low Can Your Cash to Close Go With VA?
Zero down is the starting advantage. The next question is what happens to everything else you normally pay when you buy a home.
You can still have an earnest-money deposit, home inspection, VA appraisal, lender and closing fees, prepaid interest, homeowners insurance and money collected up front for future tax and insurance bills. Some of those expenses happen before closing. Others show up on the final Closing Disclosure.
But you may not have to pay all of those closing costs yourself.
Zero down + Seller-paid costs + Iowa assistance
Seller-paid closing costs can change the picture
A seller can pay ordinary VA buyer closing costs when the purchase is structured within the applicable rules. That can substantially reduce the amount of cash you need at closing.
This is part of the offer strategy. If you ask the seller to pay some of your costs, the seller is going to look at the entire offer: the price, how much they are being asked to pay, what they will net from the sale and how confident they are that the deal will close. The purchase price also still has to work with the appraisal.
So I wouldn’t look at seller-paid costs as free money. I’d look at them as another way to structure the transaction.
The VA 4% rule is not a 4% cap on normal closing costs
This gets misunderstood a lot.
VA has a separate category called seller concessions that is generally limited to 4%. That does not mean a seller is limited to paying only 4% toward your ordinary closing costs.
Normal buyer closing costs and normal discount points are separate from that VA 4% seller-concession category. In other words, don’t take the 4% number and assume it is the maximum amount a seller can ever contribute toward a VA purchase.
Iowa’s $5,000 Military Homeownership Assistance grant may help too
For an eligible Iowa military buyer, there may be another source of help.
The Iowa Finance Authority’s Military Homeownership Assistance Program offers a $5,000 grant for eligible service members and veterans to help with down payment and closing costs on qualifying Iowa home purchases.
This is an Iowa program, separate from the federal VA home loan benefit. VA eligibility does not automatically make you eligible for the grant, and the grant is not limited to VA loans.
An eligible buyer may be able to use VA for the mortgage and use the Iowa grant toward qualifying purchase costs, but the grant has its own military-service rules, lender requirements, permitted uses and funding availability. The financing also has to be structured so the assistance and other credits work together under the applicable rules.
Because reservations and available funding can change, I would check the current program status rather than rely on an old funding number.
Check the current Iowa Military Homeownership Assistance Program rules and funding status.
Could you actually have $0 due at closing?
It can happen.
If the loan requires no down payment and permitted seller-paid costs, lender credits or eligible assistance cover enough of the remaining allowable costs, the final amount you need to bring to closing can potentially fall to $0.
If you already put down documented earnest money from your own funds, some or all of that money may also be returned to you at closing when the final figures allow it. That is a refund of money you already put into the purchase. It is not unrestricted cash back from the VA loan.
Seller credits and grant funds also cannot simply be turned into extra cash because there happens to be money left over. They have to be used in ways the transaction and assistance rules allow.
And even if the final Closing Disclosure shows nothing additional due at closing, you may still have paid money earlier for earnest money, the inspection, appraisal or other upfront expenses. “$0 due at closing” and “I never spent a dollar during the transaction” are two very different things.
Don’t forget the VA funding fee
The VA funding fee is a charge tied to using the VA home loan program. Some borrowers are exempt and do not pay it.
If you do owe the fee, you can pay it at closing or add it to the mortgage. Financing it keeps more cash in your pocket today, but it also means you start with a larger loan and pay interest on that amount.
It’s called a one-time fee because it is charged once on that particular loan. It does not mean you pay it only once in your lifetime. A later VA purchase or refinance can have another funding fee.
See VA’s current funding-fee and closing-cost guidance.
What should you use for the monthly budget?
VA loans do not have monthly mortgage insurance. That is a meaningful advantage, especially when you compare VA with another low-down-payment option.
Your full housing cost still includes principal and interest, property taxes and homeowners insurance. If there is an HOA, include that too. I’d also leave room for maintenance and normal life after closing.
A fixed mortgage rate does not freeze property taxes or insurance premiums.
When Is a Down Payment Required on a VA Loan?
For a normal VA purchase with enough entitlement and a price supported by the appraisal, zero down is an established benefit. There are still a few situations where money down can become necessary.
Not enough remaining entitlement. If part of your VA benefit is still tied to another VA loan, there may not be enough VA guaranty available to support the entire next loan with zero down.
You choose to pay above the VA appraised value. If the appraisal comes in below your contract price and the difference is not solved another way, the amount above the VA value has to come from outside the VA loan.
You’re buying with a non-veteran who isn’t your spouse. VA generally guarantees only the veteran’s share of a veteran/non-veteran joint loan. Depending on how that limited guaranty works with the lender and investor requirements, money down may be required. A non-veteran spouse is treated differently.
The loan needs a smaller balance to work. Sometimes reducing the loan amount is what makes the qualification numbers or lender/investor requirements work. That is specific to the loan, not VA taking away the zero-down benefit.
You can also choose to put money down even when it isn’t required. That lowers the amount you borrow, and if you owe the funding fee, a large enough down payment can reduce it.
The decision is whether using that cash now puts you in a better position than keeping more of it available after closing.
Yes, You Can Use a VA Loan More Than Once
The VA home loan is a lifetime benefit. Using it once does not automatically use it up.
If you sold the home and paid off the old VA loan, you may be able to restore the entitlement that was tied to it. If you still own the home and its VA mortgage is outstanding, some entitlement may remain tied to that loan, but you may still have enough left to use VA again.
Entitlement is the amount of VA’s loan guaranty available to support your mortgage. It is not cash VA gives you, and it is not your approved loan amount.
If you have full entitlement, VA does not set a loan limit. If you have only remaining entitlement available, the amount already tied to another VA loan and the county loan limit for the next property become part of the zero-down calculation.
Keeping the house creates a second question
Even if you have enough entitlement for another VA loan, you still have to qualify while carrying the housing costs that remain on the current home.
Planning to rent the old house does not automatically make its payment disappear. Rental income may be allowed to help, but the loan rules determine what can be counted and what documentation is needed.
If the home you’re keeping has a conventional or other non-VA mortgage, it does not use VA entitlement. Its payment still matters when you qualify for the next home.
If you’re trying to buy before the current home sells, my guide to buying before selling goes deeper into the timing and cash-flow side of that decision. If selling will free up a large amount of equity, here’s how to think about your home-sale proceeds before automatically putting all of it into the next house.
Should You Use VA if You Already Have Money Saved?
Maybe — and this is one of the places where VA gets oversimplified.
Having 10%, 20% or more available for a down payment does not automatically make conventional financing the better choice. VA still gives you no monthly mortgage insurance, and VA interest rates are often more competitive than conventional rates.
On the other hand, if you are not exempt from the VA funding fee and you have enough down to avoid conventional PMI, the comparison gets more interesting.
I’d look at the same house both ways and compare the things that actually affect you:
Interest rate and points
A lower advertised rate is not automatically a better deal if it requires a large upfront cost.
Cash needed at closing
How much money leaves your account after deposits, credits, assistance and any down payment are accounted for.
Monthly housing cost
Principal, interest, taxes, insurance, mortgage insurance if there is any, and HOA dues when applicable.
Starting loan balance
A financed VA funding fee increases the amount you owe even though it reduces cash due at closing.
Cash you keep
Money left for moving, repairs, emergencies or carrying two homes can have real value too.
How long you expect to keep the loan
Upfront fees matter differently if you expect to keep the mortgage for three years versus fifteen.
A bigger down payment lowers the loan balance. That part is simple. What is not automatic is whether tying up more cash in the house gives you the best overall position.
Once actual Loan Estimates are available, compare them side by side using the same purchase price, similar timing and the points or lender credits attached to each rate.
The Loan You Choose Now Can Affect Your Refinance Options Later
I would not choose a mortgage today based on the idea that you can simply refinance it later. The payment needs to work now.
If you start with a VA loan, you may later be able to use VA’s Interest Rate Reduction Refinance Loan, usually called an IRRRL. It is a VA-to-VA refinance.
If you start with a conventional or another non-VA mortgage, an IRRRL cannot replace it. VA’s cash-out refinance program is different and can refinance a non-VA mortgage into VA financing when its requirements are met.
The important point for the purchase decision is simple: the loan you choose today can change the VA refinance paths available later, but a future refinance should never be what makes an unaffordable payment look acceptable now.
What Actually Changes When You Buy With a VA Loan?
A VA purchase is still a home purchase. You make an offer, the home is appraised, the loan goes through underwriting and you close.
The VA-specific parts are where buyers tend to hear the most conflicting advice.
Your VA offer is not automatically a weak offer
Some buyers worry that using VA will automatically make a seller reject them. VA does have some specific purchase rules, but the seller is still looking at the whole offer: price, timing, requested seller-paid costs, contingencies and confidence that the transaction can close.
That is one reason the cash-to-close strategy and offer strategy belong together. Asking the seller to pay costs can be very useful, but the request also affects the seller’s net proceeds and may affect how the offer is received.
The VA appraisal is not a home inspection
The VA appraisal gives an opinion of the home’s value and checks VA’s minimum property requirements. A home inspection is separate and is the step that helps you understand the actual condition of the house.
If the VA appraised value comes in below your contract price, the VA escape clause gives you options. You can try to renegotiate the price, request a reconsideration of value, choose to cover the difference yourself, or use the clause to leave the transaction without losing your earnest money because of the low VA value.
Underwriting still makes the final loan decision
A preapproval is not final approval. An underwriter reviews your finances, the property and the loan documents before the mortgage receives final approval.
Before you sign, the Closing Disclosure shows the final loan terms, monthly payment and cash to close. Those numbers should make sense before you get to the closing table.
Have a VA Question Before You’re Ready to Apply?
Good. You don’t need to know exactly which loan you want before you call me.
If you’re trying to figure out whether you qualify, how much cash you’ll really need, whether using VA again will work, or whether VA makes more sense than conventional financing, start with the question.
I’m Blake Overton, Mortgage Loan Originator / Producing Branch Manager with Gershman Mortgage. I work with borrowers throughout Iowa. Learn more about Blake.
You can call or email me directly. If you’d rather set aside a time to talk, use my existing calendar.
Email Blake at blake@clearmortgageplan.com
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Blake Overton · NMLS #1651000
Gershman Mortgage · NMLS #138063 · Equal Housing Lender