VA Zero Down Real Estate Financing Doesn’t Mean There’s Nothing Out of Pocket at the Start

Ran into a somewhat interesting situation the other day with a buyer using a VA loan. For those who don’t know, the VA provides 100% financing for veterans and allows vets to wrap their sole cost – the VA funding fee – into the loan itself (if the contract is so written by the real estate agent – it’s not an automatic, nor do all buyers want that funding fee financed.)

What the VA financing doesn’t alter is the need to provide an earnest deposit to the title company when escrow is opened. While it’s possible (but not common) to see earnest deposits as low as $100, it’s all but unheard of for any seller – a lender selling a bank owned home or otherwise – to take a home off the market for any length of time and allow the buyer to walk away at any point in the transaction without any possible retribution (if the Arizona Association of REALTORS Resale Purchase Contract is use, the maximum amount of financial recourse for a seller is the earnest deposit.)

There are no federal laws that require earnest deposits, as was pointed out to me; at the same time, there are no laws that require sellers to accept an offer under such circumstances.

And if you’re looking at a bank owned home, your offer is DOA before it’s submitted unless the earnest deposit is at least $1,000 for financed deals (generally speaking, of course, as exceptions may exist) and 10 percent of the purchase price on a cash deal.

You can try to fight this battle but it’s one that can’t be won.

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at