What zero down actually means
The VA home loan is one of the most valuable mortgage benefits ever created for service members, veterans, and eligible surviving spouses. The Department of Veterans Affairs guarantees a portion of the loan, which allows participating lenders to finance up to 100% of a Utah home's reasonable value — meaning many eligible borrowers can purchase with no required down payment.
Zero down means the VA doesn't require a down payment for qualified borrowers. It does not mean zero cost. Earnest money, inspections, appraisal, prepaid taxes, homeowners insurance, closing costs not covered by credits, and cash reserves still matter — even on a fully financed VA purchase.
Utah example. A Salt Lake County veteran buying a $475,000 starter home with a VA loan can finance the full purchase price. But that same buyer typically still needs cash for earnest money, a general home inspection, prepaid property taxes and insurance collected at closing, and a small reserve for the days between closing and the first payday in the new home.
Costs a VA buyer may still pay
- Earnest money. A good-faith deposit — often 1% of purchase price — held by the title company and credited toward the buyer's cash to close.
- Home inspection. Typically $350–$600 in Utah, paid at time of service, non-refundable.
- Appraisal. The VA appraisal fee is set by regional VA schedules; the buyer usually pays up front.
- Closing costs. Title, escrow, recording, lender, and government fees — a portion of which can be paid by the seller or lender.
- Prepaid property taxes. Utah counties collect taxes annually; the closing statement pro-rates them.
- Homeowners insurance. The first year's premium is typically paid at closing.
- HOA setup fees. Common in newer Utah subdivisions and condos.
- Moving expenses. Movers, deposits, and setup for the new residence.
- Utility deposits. Some Utah utilities require deposits for new accounts.
- Emergency cash reserves. A cushion for the first several months of ownership.
| Expense | Required? | Refundable? | Typical timing | Can seller help? |
|---|---|---|---|---|
| Earnest money | Contractually | Often, if buyer cancels within contract terms | At contract acceptance | Credited to buyer at closing |
| Home inspection | Optional but recommended | No | During due diligence | Rarely |
| VA appraisal | Yes | No | Early in loan process | Sometimes negotiable |
| Closing costs | Yes | No | At closing | Yes — seller/lender credits allowed |
| Prepaid taxes & insurance | Yes | No | At closing | Yes, via concessions |
| Reserves | Recommended | Buyer's own funds | Ongoing | No |
VA funding fee and exemptions
The VA funding fee is a one-time charge that helps sustain the VA loan program so future veterans can benefit. It is typically financed into the loan rather than paid in cash. The percentage varies based on down payment, whether it is a first or subsequent use of the benefit, and loan purpose.
- First use, 0% down. Higher funding fee percentage than a subsequent use with a down payment.
- Subsequent use, 0% down. Increases relative to first use with no down payment.
- Down payment impact. Putting 5% or 10% down reduces the funding fee percentage.
Exemptions. Veterans receiving VA disability compensation, eligible surviving spouses, and certain other qualifying borrowers are generally exempt from the funding fee. Because current percentages and exemption categories change, verify the applicable schedule at va.gov and with your Utah VA lender before closing.
Seller credits and lender credits
VA loans allow the seller to pay all of the buyer's allowable closing costs plus additional "seller concessions" up to 4% of the property value. Concessions can cover the funding fee, prepaid taxes and insurance, and even certain buyer debts.
Lender credits — funded through a slightly higher interest rate — can further reduce the cash a Utah VA buyer brings to closing. Whether it makes sense depends on how long the buyer expects to hold the loan.
Utah market example. On a $500,000 Davis County purchase, negotiating a $10,000 seller credit toward closing costs can turn a "zero down" VA offer into a genuinely low-cash-to-close transaction, even after the funding fee, prepaid taxes, and first insurance premium are collected.
When making a down payment can still make sense
- Lower monthly payment. Financing less means a smaller principal and interest amount each month.
- Reduced funding fee. A 5% or 10% down payment lowers the funding-fee percentage.
- Competitive offers. In multi-offer Utah situations, a modest down payment can help a VA offer stand out.
- Personal financial goals. Some buyers prefer to preserve equity and reduce long-term interest.
Zero down is a benefit, not a strategy. The right choice depends on your reserves, timeline, other debts, and the next 5–10 years of your household plan.
Utah scenarios
- Salt Lake County. Urban and suburban inventory, strong VA lender familiarity, higher property values pushing prepaid taxes and insurance up.
- Utah County. Rapid new construction, HOA and metro-district fees common — read the disclosures.
- Davis County. Popular with Hill AFB families; seller concessions are frequently used to offset cash to close.
- Washington County. Southern Utah retirement and second-home market; verify VA occupancy requirements apply.
Learn more
The full VA loan playbook — eligibility, entitlement, property requirements, and lender comparison — is covered in The Utah VA Loan Consumer Guide. For payment scenarios, use the Home Affordability Calculator.
Real Utah Mortgage Scenarios
Here is an example of how this situation might be evaluated. These are illustrative, anonymized situations built from the kinds of questions Utah homeowners ask — not descriptions of completed transactions, and not an offer or commitment to lend.
Davis County veteran buying with full VA entitlement
- Scenario:
- Active-duty service member near Hill Air Force Base
- Target purchase price:
- $475,000
- Cash available:
- $22,000
- VA entitlement:
- Full, first use
- Goal:
- Buy without spending the savings account on a down payment.
How Tres Would Evaluate This
- ·VA with zero down: keeps the $22,000 intact and avoids monthly mortgage insurance. The VA funding fee applies unless the buyer is exempt, and it can be financed into the loan.
- ·VA with a small down payment: reduces the funding fee tier and the loan amount, but spends cash reserves that may be needed for moving and furnishing.
- ·Conventional 5% down: no funding fee, but requires $23,750 plus closing costs and adds monthly mortgage insurance until enough equity accrues.
- ·Seller-paid closing costs: in a balanced market this is often the difference between closing comfortably and closing with nothing left in the bank.
Takeaway: Zero down is not automatically the cheapest path, but for a buyer with limited reserves it is usually the most durable one.
Illustrative only. Figures are examples, not quotes. Actual options depend on age, property, income, credit, program guidelines, and current rates.
