“VA NO-NO” = No Down Payment and No Closing Costs For VA Loans

“VA NO-NO” = No Down Payment and No Closing Costs For VA Loans 

There is term for a VA purchase home loan where the borrower pays no down payment or closing costs called; “VA NO-NO”.  This means for U.S military veterans and active military purchasing a house, condo, 2-4 unit or manufactured home, you do not have to have ANY down payment, and the seller is allowed to credit you for every penny of your closing costs.  That means your can buy your own home today using a VA Loan and get into the home without using any money out of your pocket.  The combination of 50 year lows on 30 year fixed interest rates and home prices that have fallen far off their peaks in most markets, makes it one of the more attractive times in recent history for an active military member or veteran to get into their own home using their VA benefits.
It is standard and automatic to get 100% financing using a VA loan if you qualify and is discussed in other articles on www.socalvaloans.com.  But getting the seller to credit your for closing costs is something that you will have to discuss with your real estate agent when you begin to make offers to buy properties.   The fact is that many sellers today are crediting buyers 3% and more for closing costs, so you will have a very good chance at having the seller pay for 100% of your closing costs.  Below are typical closing costs in a purchase transaction:
  • Lender Fees (underwriting fee, processing fee, credit report fee, appraisal fee, loan origination fee, discount points)
  • Title and escrow related fees (title insurance, escrow fee, recording fees, notary fees)
  • Lender impounds (VA home loan lenders take reserves for property taxes and hazard insurance)
When all of the above fees are added up, they can amount to a substantial sum.  Many times 3-4% of the purchase price.  So if you are purchasing a $350,000 house, in many cases closing costs can amount to $10,500 to $14,000.  So it is a very big benefit and very essential to discuss up-front with your real estate agent to ask the seller to credit you for ALL of your closing costs when writing up your purchase contract.  
Something very unique to VA loans is that VA will allow a seller to not only pay ALL your closing costs, but they will also allow a seller to credit 6% to pay off other debt obligations.  VA allows a seller to credit 4% for closing costs and another 6% for seller concessions.  This means if you have a car loan, credit cards, student loans, etc…, you could negotiate that a seller pay off those loans by giving you a credit at close of escrow.  How would you like to get into a house using a VA Loan with zero down payment, zero closing costs and also have the seller pay off some or all your debt!!!
Please check out some of our other articles related to VA Home Loans on our site.  With low home prices and very low 30 year fixed rates, it is truly a unique time to think about using your VA Loan benefits.
Please contact us for more info and check out our sister web site www.socalfhahomeloans.com on using the terrific FHA Loan to purchase property.
Rob Chomentowski
Sr. Loan Officer
Affinity Financial
858-922-7899 direct
rob@affinity-financial.com
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