Buying a home with no money out of pocket certainly seems too good to be true, right?  Wrong.

As you know, among the many benefits of obtaining a VA loan, the most exciting one is that there is no down payment requirement.  You can finance up to 100% of your home’s value!  The VA funding fee can also be added to the loan, and although it can be paid in cash, it is typically financed.  For instance, if you buy a home for $200,000 and the home is appraised at $200,000, you’re allowed to add the VA funding fee of $4,300 to the loan and finance a total of $204,300. No other fees can be added to the loan when you are purchasing a home. 

So what about all of the closing costs I have to bring to the table???

You CAN buy a home using your VA benefits in any state, with no money down, AND no closing costs……….

Simple!  Ask the seller to pay ALL your closing costs!

In today’s housing markets, sellers have been desperate to sell their homes. Offering incentives such as paying the buyer’s closing costs, have become very popular. Some sellers only offer to pay a percentage or a particular dollar figure, while others willingly open their checkbooks and pay everything.

When you find a home and you and your agent are preparing to make an offer, ask the seller to cover your closing costs. To make the offer more attractive to the seller you may want to consider a full price offer, meaning, most sellers price their homes at market value but they expect a buyer will offer less. It’s just how things are done. So by offering the seller the full asking price, they are making more than expected and may be willing to cover all your costs.

In some cases, the full price offer may not be enough to cover your closing fees and the seller may want to increase the price of the home to cover the costs. This is perfectly legal to do. If the price of the home is $200,000, the seller may increase the price to $206,000 to make sure he is netting enough profit to pay all closing costs.  Essentially, you’re still paying for closings costs, you’re just including them in the price of the home and in effect, financing them.

Caution:  The VA will only finance what the home is appraised for. If the appraisal on the home is less than the amount needed to finance, you will have to renegotiate with the seller on price and closing cost contribution.