No down payment does not mean no cash to close. A VA purchase budget can include settlement charges, taxes, insurance, prepaid items and an appraisal or inspection paid before closing. Your Loan Estimate and final Closing Disclosure show how transaction-specific credits and deposits are applied.
Keep these five categories separate
| Category | What to verify |
|---|---|
| Down payment | Entitlement, value and lender requirements; zero down is not automatic. |
| Loan and settlement charges | Which charges apply and who is paying them. |
| Prepaids and escrow deposits | Insurance, tax timing and the initial escrow requirement. |
| Already-paid amounts | Earnest money and items paid outside closing; avoid counting them twice. |
| Permitted credits | Seller, lender and program credits, their conditions and applicable limits. |
An illustration of a purchase appraisal credit
Assume a required purchase appraisal costs $750 and the transaction meets all VHAP purchase-bundle conditions. The eligible credit covers $750 at closing, not an automatic $800 cash payment. If the eligible appraisal costs $900, the credit is capped at $800 and $100 remains outside that benefit. A closing credit does not remove an expense that must be paid earlier.
The home warranty is a separate purchase benefit with its own selected plan and closing credit. Confirm the benefit and its treatment with your loan officer and settlement team. Read the full purchase-benefit conditions.
Illustrative arithmetic only; not a Loan Estimate or a promise of final cash to close.
Does the VA 4% rule limit every seller-paid cost?
No. VA distinguishes ordinary buyer closing costs from seller concessions. Its current consumer guidance limits seller concessions to 4% of reasonable value, while ordinary closing-cost credits are treated separately. Do not apply one blanket percentage to every credit or assume unused credits become cash back. Have the lender classify the actual items and confirm the applicable limits.
Before relying on a credit
- Confirm the written amount and who funds it.
- Confirm which actual charge it may cover.
- Ask whether the charge is due before closing.
- Check the lender’s treatment of all credits together.
- Keep a reserve for costs not covered by the offer.
Sources checked November 2, 2026. VA funding fee and closing costs ↗ · CFPB: compare Loan Estimates ↗. Educational information; VA requirements, lender standards and transaction details require separate review.