Does zero down mean no cash at closing?

Zero down means no down payment, not automatically no closing costs.

Your cash to close includes any down payment, closing costs, prepaid expenses and initial escrow deposits, minus deposits already paid and applicable credits or adjustments.

On a VA purchase loan, you can finance the funding fee if you owe one, but you cannot roll the other closing costs into the loan.

Ask for the estimated cash to close on both options so you can compare what you need upfront, not just the monthly payment.

Source: CFPB Loan Estimate explainer.

Who is exempt from the VA funding fee?

You do not owe the funding fee if any of these apply:

• You receive VA compensation for a service-connected disability, or are eligible but receive retirement or active-duty pay instead.
• You are a surviving spouse receiving Dependency and Indemnity Compensation.
• You are a service member with a proposed or memorandum rating received before closing that establishes compensation eligibility because of a pre-discharge claim.
• You are on active duty and provide evidence of a Purple Heart on or before closing.

If VA later awards disability compensation with an effective date before your closing, you may qualify for a funding-fee refund.

Source: VA funding-fee exemptions and refunds.

How much is the funding fee if I am not exempt?

For VA purchase loans, the fee depends on your down payment and whether you have used the benefit before:

The fee applies to the loan amount before adding the fee, not the full purchase price when you make a down payment. Prior use solely to buy a manufactured home still qualifies for the first-use fee.

Financing the fee reduces what you pay upfront but increases your loan balance and the interest you pay.

Illustrative only: on a $400,000 purchase qualifying for zero-down VA financing with no appraisal shortfall, a funding-fee-exempt buyer starts with a $400,000 loan. A nonexempt first-use buyer financing the 2.15% fee adds $8,600, for a $408,600 starting balance. These are loan balances, not cash-to-close totals or a savings estimate.

Source: VA purchase funding-fee chart.

Does conventional always mean PMI?

No. With 20% down, a conventional purchase does not require PMI. With less down, PMI is generally required; some options trade a separate PMI charge for a higher interest rate.

For many conventional mortgages on a single-family primary residence with borrower-paid PMI, you can request cancellation at 80% of the home’s original value, subject to payment history, property value and other requirements. PMI generally ends automatically when the balance is scheduled to reach 78% of original value, if payments are current.

Ask your servicer for your loan’s cancellation rules. Appreciation does not automatically remove PMI, and lender-paid coverage follows different rules.

Source: CFPB PMI cancellation rules.

Source: CFPB PMI costs and alternatives.

When is a conventional quote worth comparing?

Compare a conventional quote when you can put 20% down without draining your savings, or when you owe a VA funding fee and expect to sell or refinance within a few years. That is a reason to run both sets of numbers, not an automatic reason to choose conventional.

Use the same purchase price and loan term. Compare cash to close, total monthly payments, and the balance you would still owe when you expect to sell or refinance. Count interest, fees and any mortgage insurance over that same period, including a financed funding fee once and the interest charged on it.

A down payment reduces what you borrow; it is not a lender fee. Keep principal repayment and money set aside for taxes and insurance separate from borrowing costs, and do not assume a future refinance is guaranteed.

Ask Jason to compare VA and conventional for your purchase, including cash to close, monthly payment and how long you expect to keep the loan.

Source: CFPB guidance for comparing Loan Estimates.