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VA BuyersFour things, in this order: your earnest money deposit within about three business days of acceptance, the VA appraisal fee when your lender orders it, the home inspection in the first two weeks, and whatever cash to close remains at the end. The deposit is credited back to you at closing. The middle two are spent whether or not the deal survives.
Zero down is real. It is the single best feature of the benefit, and it is why a veteran can buy a $700,000 home in San Diego North County without a $140,000 down payment sitting in savings.
It is also the most misunderstood phrase in the program. Zero down means no down payment. It does not mean no cash. Here is exactly when money leaves your account and what comes back.
The four payments, side by side
| What | When | Typical amount on a $700,000 home | Do you get it back? |
|---|---|---|---|
| Earnest money deposit | About 3 business days after acceptance | $7,000 to $21,000 | Yes, credited at closing |
| VA appraisal fee | When your lender orders it | About $750 to $1,100 | No |
| Home inspection | First one to two weeks | About $350 to $700 | No |
| Cash to close | Before signing | Varies, see below | It is the final bill |
Payment one: the earnest money deposit
California contracts commonly run 1% to 3% of the purchase price, due to escrow within roughly three business days of acceptance. On $700,000 that is $7,000 at the low end and up to $21,000 at the high end. One percent is common locally, though a competitive situation can push it higher.
This is good faith money, not a fee. It sits in escrow and gets credited toward what you owe at closing. The important thing to understand is when it stops being refundable, which depends on written contingency removals rather than on dates passing. There is a full breakdown of how deposits actually get lost on the blog, and it is worth reading before you sign anything.
Payment two: the appraisal, which the transcript version of this leaves out
Every VA purchase requires an appraisal. VA sets maximum allowable fees by state and property type, and California single-family work generally lands somewhere around $750 to $1,100. Your lender orders it, and most collect the fee upfront when they do.
That timing matters more than the amount. Once the appraiser completes the work, the fee is spent. If the value comes back short and you walk away, you do not get it back. This is the cost most first-time buyers never budget for, because nobody mentions it until the lender asks for a card number.
Payment three: the home inspection
VA does not require one. You should get one anyway. A standard inspection in this area runs roughly $350 to $700, and specialty follow-ups like sewer scope, roof, or foundation evaluations typically add $100 to $300 each.
The appraisal and the inspection get confused constantly, and they are not substitutes. The appraisal confirms value and checks VA minimum property standards for the lender's benefit. The inspection tells you what you are actually buying. One protects the loan. The other protects you.
Payment four: cash to close
This is where everything else lands, and it splits into two categories that behave very differently:
- Fees. Title, escrow, recording, lender charges. Money that leaves and does not come back.
- Prepaids and impounds. Your first year of homeowners insurance and several months of property taxes, deposited into an account the lender holds for you. This is your money being parked, not spent, and it is frequently the largest single line on the page.
Two things work in a veteran's favor here. VA caps lender origination at 1% of the loan amount, and certain fees are non-allowable, meaning they cannot be charged to the veteran at all. They fall to the lender, the seller, or the agent instead. Ask your lender which items on your estimate are non-allowables and who is absorbing them.
Second, a seller can pay your ordinary closing costs with no cap. In a market where sellers are competing for offers, that ask lands far more often than buyers expect.
Pro Tip: Have roughly 2% of the purchase price liquid before you write an offer, and treat it as separate from your deposit. On $700,000 that is about $14,000 covering the appraisal, the inspection, any specialty reports, and the cash to close that a seller credit does not absorb. Buyers who budget only for the deposit are the ones who end up declining a sewer scope on a seventy year old house to save four hundred dollars.
What the funding fee does and does not cost you
The VA funding fee is real money, commonly 2.15% on a first use with nothing down, but it is almost always financed into the loan rather than paid at the table. It raises your loan balance, not your cash to close.
Veterans receiving VA disability compensation are exempt from it entirely. If you have a rating, or a claim pending that may become one, say so to your lender early.
Ask Your Lender This
Two questions, word for word, before you write your first offer:
- "Do you collect the appraisal fee upfront or at closing, and how much is it for this property type?"
- "On my estimate, which items are VA non-allowable fees, and who is paying them?"
The first tells you what you need liquid in week one. The second tells you whether your lender is handling the non-allowables correctly or quietly passing them to you.
If you want a real cash-needed figure for a specific price range rather than a rule of thumb, reach out and we can build it out before you start looking. You can also call me at (619) 485-8293.
Frequently Asked Questions
What does a VA buyer pay out of pocket?
The earnest money deposit, the appraisal fee, a home inspection if you choose one, and whatever cash to close remains after any seller credits. The deposit comes back as a credit. The appraisal and inspection do not.
Can the seller pay all of it?
A seller can cover ordinary closing costs without a cap under VA rules. They cannot pay your deposit, and the appraisal and inspection are spent before closing regardless of who is credited later.
What happens to my deposit if the deal falls apart?
It depends entirely on whether you have removed your contingencies in writing. That is a separate and important topic, covered in detail on the blog.
Is the inspection worth it on a VA loan?
Yes. The VA appraisal is not an inspection and was never designed to be one. For veterans, military buyers relocating on PCS orders, and first-time buyers in particular, a few hundred dollars now is the cheapest information you will buy in the entire transaction.
Figures are illustrative and vary by lender, property type, and contract. VA fee schedules and allowable charges are subject to change. This content is for informational purposes only and is not legal, tax, or financial advice. Confirm all costs with your lender on a written Loan Estimate. All real estate services comply with NAR, HUD, and California DRE regulations.
