Zero down does not mean zero cash at the closing table. Closing costs on a VA purchase are real, and the good news is that the VA gives buyers more room than most people expect to have the seller cover them. The catch is that the rules sort costs into different buckets, and a seller credit that lands in the wrong one can cost you at the last minute.

What closing costs on a VA purchase actually include

Closing costs are the lender, title, appraisal, recording, and prepaid items that come due when the loan funds. Prepaids include the first stretch of property taxes and homeowners insurance set aside in escrow. Together they commonly land in the low single-digit percentages of the purchase price, which on a $350,000 home is a meaningful number to have a plan for before you write the offer.

The two buckets sellers can pay into

The first bucket is standard closing costs, such as lender, appraisal, title, and recording fees. Sellers can generally cover these without a percentage cap. The second bucket is called seller concessions, which cover extras such as the VA funding fee, prepaid taxes and insurance, paying off a buyer’s debt, or funding a temporary rate buydown. Concessions are generally limited to 4% of the home’s reasonable value shown on the VA’s Notice of Value.

Where sources and lenders disagree, and why it matters

Published guides do not always agree on whether discount points count toward the 4% limit, or whether the base is the appraised value or the purchase price. Many lenders also add their own overlays that limit total seller contributions to a lower number. Rather than guessing, ask your lender to label each proposed seller credit as a standard closing cost or a concession before you submit the offer, so nothing pushes you over a limit during underwriting.

How the appraisal can change your credits

The 4% concession limit is tied to value. If a home appraises below the contract price, the base shrinks and so does the amount of concessions you can use. That is one reason to build flexibility into an offer, and to understand how the 2026 appraisal changes could affect the property you are buying.

A realistic way to use concessions on a PCS timeline

Many PCS buyers use seller credits to cover prepaids and a rate buydown, then finance the funding fee into the loan if the concession room is used up. The right mix depends on how long you plan to own the home and how competitive the listing is. In a hot segment a seller may balk at large credits, while a home that has been sitting is a stronger place to ask.

Before you write an offer, ask us to run a closing cost estimate with your lender so you know which seller credits fit under the limits. We will help you ask for what is realistic for that specific listing.

FAQ

Can a seller pay my closing costs on a VA loan?

Yes. Sellers can generally cover standard closing costs without a percentage cap, and can also contribute concessions of up to 4% of the home’s reasonable value for items such as the funding fee, prepaids, or a rate buydown.

What counts as a seller concession on a VA loan?

Concessions are extras beyond standard closing costs, such as paying the VA funding fee, prepaid taxes and insurance, a buyer’s debt payoff, or a temporary rate buydown.

Do discount points count toward the 4% limit?

Sources and lenders treat this differently. Ask your lender to confirm how each seller credit is classified before you finalize the offer.

What happens to my seller credit if the home appraises low?

The 4% limit is tied to the home’s reasonable value, so a lower appraisal can reduce the concessions you are allowed to use.