By Frederick Blum, Broker/Owner of Blum Realty Group
A VA loan can remove the down payment from a San Diego home purchase. The question I would work through with you next is how much money you need before closing, at closing, and after you get the keys. Those are three different numbers, and knowing them makes choosing a home much easier.
A buyer with enough income to qualify can still feel stretched by insurance, moving expenses, a larger deposit, or repairs after the move. I want your purchase plan to account for those costs before we write the offer. Here is how I would build that plan with you at Blum Realty Group.
When can a San Diego VA buyer purchase with no down payment?
With full VA entitlement, the VA does not impose a county loan limit on a purchase with no down payment. The lender still must approve your income, credit and ability to repay, and the property’s value matters. If some entitlement remains tied to another VA loan, the calculation changes; a down payment may be required. Have the lender review your actual Certificate of Eligibility rather than assume that a previous VA purchase prevents another one. See the VA’s full and remaining entitlement guidance.
Start with a payment that fits your household, then work backward to a price range. That payment needs to include the mortgage, property taxes, homeowners insurance, any HOA dues and applicable special assessments. An Eastlake home with association dues and additional tax assessments can have a different monthly cost from another house at the same price. A Downtown condo adds building-level questions. We should compare the actual properties, not just their asking prices.
Separate your money into four buckets
- The earnest-money deposit. This is money delivered to escrow under your purchase contract. It is part of your purchase funds, not an extra charge on top of everything else. Its amount, due date and protections need to be clear before you sign.
- Expenses paid before closing. Budget for inspections, any specialist evaluations and charges your lender collects early. Keep a record of what has already been paid so it is not counted twice.
- The remaining cash to close. This includes your share of closing costs, prepaid items, initial escrow deposits and any down payment, reduced by allowed credits and money already deposited.
- The money you keep. Moving, immediate work, normal living expenses and a repair cushion belong in the plan even when they do not appear on the closing statement.
The Loan Estimate’s Calculating Cash to Close section helps reconcile the purchase funds, credits and deposit. Ask the lender to walk through it using the property you are considering. An early estimate based on generic insurance or taxes is a starting point; the numbers should become property-specific before you commit.
An $800,000 VA purchase: what could the cash requirement look like?
Consider an illustrative buyer with full entitlement, no down payment, first use of the benefit and no funding-fee exemption. Assume the home appraises for the contract price and the lender approves the following structure. These figures demonstrate the accounting; they are not a closing-cost quote.
- Purchase price and base loan: $800,000.
- Financed VA funding fee at 2.15%: $17,200.
- Total loan with the financed fee: $817,200.
- Other eligible closing costs and prepaid/escrow items due at closing: $18,000.
- Agreed seller credit, fully usable against eligible items: $10,000.
- Buyer’s remaining share of those closing items: $8,000.
If the buyer already placed $5,000 into escrow, the remaining closing payment is $3,000. The buyer’s purchase cash is still $8,000 in total: the $5,000 deposit plus that final $3,000.
Now add $900 of inspections paid separately and a chosen $10,000 cash cushion. The buyer needs $18,900 available across the process, even though the down payment is zero and the final closing payment is only $3,000. The $10,000 cushion is this example’s planning choice, not a universal lender reserve requirement.
Without the $10,000 seller credit, the same plan requires $28,900. That difference is why we should discuss credits while choosing the offer terms. A home with a lower asking price but no useful credit may require more of your savings at closing.
Check the funding fee before counting your savings
For a VA purchase with less than 5% down, the current funding fee is 2.15% for first use and 3.3% for subsequent use. It falls to 1.5% with at least 5% down and 1.25% with at least 10% down. Eligible borrowers, including certain veterans receiving service-connected disability compensation, are exempt. Confirm your status with the lender. The fee can be financed; other purchase closing costs cannot simply be added to the VA loan in the same way. The VA’s funding-fee and closing-cost page lists the current rates and complete exemptions.
In our example, financing the fee preserves cash but increases the loan balance and the payment. If you are exempt, remove the $17,200 fee from that loan calculation. If you are thinking about making a down payment, request a side-by-side comparison showing the payment, fee and savings left afterward. A lower fee is useful only in the context of your entire purchase.
How seller and lender credits fit the offer
A seller can agree to pay eligible closing costs. VA treats ordinary closing-cost payments separately from seller concessions; its 4% concession limit is not a blanket cap on every seller-paid closing dollar. Have the lender classify the proposed credit before you put it in the offer. Lender credits can also reduce upfront costs, often in exchange for a higher interest rate. Compare the cash saved against the resulting payment.
I would look at how long the property has been on the market, its condition, competing choices and the seller’s priorities. Then we can decide whether to ask for a lower price, a credit, repairs or a combination. Our seller-credit versus price-reduction guide explains that tradeoff in more detail.
Check any buyer-broker compensation you have agreed to pay and how the transaction will address it. Compensation is negotiable, and the written agreements should match the budget. Do not build a plan around unused credits coming back to you as spending money; the lender and escrow team must confirm what can actually be applied.
The property can change the budget
Appraisal: The required VA escape clause protects a buyer when the VA value is below the contract price. Options can include renegotiating, seeking a reconsideration of value with supporting evidence, or choosing to bring additional cash. Review the actual contract and clause before deciding. The VA homebuying process also explains why an appraisal and an independent home inspection serve different purposes.
Insurance: Obtain a quote for the exact address early. A listing’s attractive mortgage payment means little if the eventual insurance package strains your budget. Read our insurance-before-contingency guide for the questions to resolve.
Condition and associations: Identify repairs, association charges and any special assessments before treating the home as affordable. If it is a condo, ask the lender to confirm the project’s VA eligibility early. Do not assume approval for a nearby building covers the one you want.
Timing: Count overlap with your current housing, moving expenses, utility deposits and the first projects you would undertake. For military moves, match the occupancy plan and loan timeline to your orders and household arrangements with the lender.
What I would ask you to have ready before an offer
- A lender-reviewed Certificate of Eligibility and a clear answer about remaining entitlement and any funding-fee exemption.
- A comfortable total monthly payment, not just the lender’s maximum approval.
- A written cash estimate for the actual home, showing deposit, credits, paid-outside-closing items and remaining cash.
- Insurance and association information, with unresolved items assigned to a person and deadline.
- Your inspection plan and the contract protections we intend to retain.
- A savings floor you are comfortable keeping after closing.
My role as your buyer’s broker is to connect those decisions: which homes deserve your time, what an offer should ask for, and what needs to be resolved before you move forward. If you already own a VA-financed home, also review how a sale or assumption can affect your next move. A new VA purchase and taking over someone else’s VA loan are different transactions.
Common questions about VA purchase cash
Does a zero-down VA loan mean I need no savings?
No. You still need a plan for your deposit, any costs paid before closing, your share of closing expenses and the money you want left afterward. Seller or lender credits can reduce eligible upfront costs when approved and properly documented.
Is my earnest-money deposit an additional closing cost?
The deposit is part of your purchase funds and is credited in the closing calculation. Track it separately from fees already paid so you understand both the total money used and the remaining amount needed at closing.
Can a San Diego VA buyer purchase above the county loan limit with no down payment?
A borrower with full entitlement is not subject to a VA county loan limit for a zero-down purchase, but lender qualification and the property’s value still control the approved transaction. Remaining entitlement can produce a different down-payment requirement.