VA Home Loan Guide
VA Zero-Down: Residual Income, Entitlement & Closing-Cost Strategy
- $0 down for many eligible buyers; no monthly MI
- Qualification looks at residual income, not just DTI
- You can reuse VA by restoring or using partial entitlement
- Plan closing funds; leverage seller credits where allowed
Zero-down and no monthly MI are powerful—but residual income is the quiet superpower. Below is the plain-English playbook and a simple numbers walk-through.
What Makes VA Different
Backed by the Department of Veterans Affairs. Primary residence only. Condos must be VA-approved.
Backed by the Department of Veterans Affairs: lenders can approve with no required down in most cases and without monthly mortgage insurance. You'll still plan for third-party costs (appraisal, title, escrows, etc.), but there are flexible ways to cover them where allowed.
Who it's for: eligible active-duty service members, veterans, and surviving spouses. VA loans are for primary residences and include 1-unit homes plus some multi-unit options when you occupy one unit.
Residual Income (The VA Superpower)
Most loans focus on DTI. VA adds a second lens: residual income—the dollars left over after major expenses. The guideline tables vary by household size and region. Strong residual income can offset a higher DTI, which is why well-structured VA files often sail through.
How to boost residual income quickly:
- Reduce recurring debts (e.g., pay down a small card).
- Verify accurate household size and dependents.
- Document stable income and housing history clearly.
Entitlement & Re-Use (Yes, You Can Use VA Again)
Basic vs. bonus entitlement: Think of entitlement as your VA "backing power." If your prior VA loan is paid off and the home is sold, you can generally restore entitlement. If you still own the home, you may have partial entitlement available (limits apply).
Common paths:
- Sell → Restore: Cleanest way to free up full entitlement.
- Refi or Substitute: In certain cases, you can substitute a buyer's entitlement or refi to restructure.
- Partial Entitlement: Buy again with remaining entitlement if numbers pencil (we'll map it out).
We'll pull your COE (Certificate of Eligibility) and lay out options in writing.
Closing-Cost Strategy (Keep Cash-to-Close Predictable)
Even with $0 down, you'll plan for:
- Appraisal, title, recording, prepaid taxes/insurance, and escrows.
- Seller credits: negotiable within VA's concession rules—great for minimizing cash-to-close.
- Points: Only if they fit your timeline; not a must-have.
Tip: Ask us to structure a "net to close" plan that lines up credits, prepaids, and escrows so there are no day-of surprises.
Simple Numbers Walk-Through (Concept Only)
- Price: $400,000
- Down Payment: $0 (VA)
- Closing Costs/Prepaids: Still required; often offset in part by seller credits where allowed.
- Funding Fee: May apply; exemptions exist for many eligible veterans.
These are mechanics, not quotes or offers. We'll model your exact figures.
Do I need perfect credit?
No. Overall history and residual income matter a lot. Clean housing history helps.Can I buy a duplex?
Often yes—if you occupy one unit and meet VA/lender rules.What about condos?
The project must be VA-approved—we can check it early.I used VA before—am I done?
You can reuse it. We'll map restore vs. partial entitlement options.Can seller credits cover everything?
Credits can reduce cash-to-close significantly, within VA/contract limits.What To Do Next
- Pull your COE (we'll help).
- Get a VA-savvy pre-approval with a written cash-to-close plan.
- If you've used VA before, review entitlement paths.
- Align the offer with seller credits and timelines.
Educational only; not a commitment to lend. Qualification and terms subject to credit, income, collateral, and underwriting approval. Equal Housing Lender. Rockhouse Mortgage, LLC. NMLS #2469785.