The VA loan is one of the most powerful benefits available to veterans and active service members: no down payment, no private mortgage insurance (PMI), and competitive interest rates. But what the VA doesn’t always tell you is how much fine print comes along with those benefits.
Without the right guidance, buyers can run into surprise costs, loan delays, or even miss out on their dream home entirely. Here's the no-BS truth about VA loans, and how working with a VA-savvy real estate agent in Colorado Springs can make all the difference.
The VA Funding Fee Isn’t “Free”
While the VA loan allows for 0% down, that doesn’t mean the loan comes without cost. Most VA buyers are required to pay a VA funding fee, which is typically added to the total loan amount. For example, on a $300,000 home, your actual loan balance after closing could be over $310,000.
This fee can put you in a position where you owe more than the home is worth when you first move in. That’s why it’s important to understand your future plans before buying. If you plan to sell within a few years, you may not build enough equity to cover selling costs or even break even. A great agent will help you understand how the funding fee affects your loan and monthly payment, and check if you qualify for an exemption, such as those available for veterans with disabilities or Purple Heart recipients.
You Still Need Cash at Closing
The term “zero down” is often misunderstood. While the VA loan removes the need for a traditional down payment, there are still upfront costs buyers need to be ready for. You’ll need to pay earnest money deposits, inspection fees, closing costs, and often appraisal fees. These aren’t optional and usually can't be rolled into the loan. This is where the right real estate agent makes a major difference. They’ll negotiate with the seller to cover some of those costs when possible, help you shop for lenders that don’t charge unnecessary junk fees, and ensure you’re financially prepared for the full scope of your investment.
VA Appraisals Can Stall the Sale
VA appraisals serve two purposes: confirming the value of the home and ensuring it meets the VA’s Minimum Property Requirements. These include things like no roof leaks, safe electrical systems, secure stair railings, intact windows, and more. If the property doesn’t meet those standards, the loan won’t be approved until the repairs are completed. This can quickly derail a deal, especially if the seller isn’t willing to make repairs. A seasoned agent knows how to spot these potential problems ahead of time, write protective terms into your offer, and negotiate effectively so the transaction stays on track.
In Colorado, You Pay for Termite Inspections
VA guidelines allow termite inspection costs to be paid by the buyer in certain states, and Colorado is one of them. These inspections usually cost between $100 and $200. If termites or wood-destroying insects are found, treatment and a follow-up clearance letter will be required before closing can happen. A top agent won’t just tell you this after the fact. They’ll get the inspection ordered early in the process, help you budget for it, and work to get the seller to pay for treatment if necessary. It’s a small detail, but one that can create a big headache if not handled correctly.
Low Appraisals Can Kill the Deal
If the VA appraiser values the home below your agreed purchase price, the VA will only guarantee the loan up to that lower amount. That means you’ll either need to renegotiate the price with the seller or bring cash to the table to cover the difference. A strong buyer’s agent sets realistic expectations from the beginning. They’ll explain appraisal gap coverage options, help you analyze whether paying the difference in cash makes sense, and, if necessary, guide you away from a risky purchase. Without this kind of support, buyers often end up overpaying, or walking away too late.
The VA Doesn’t Lend the Money
A common misconception is that the VA is the lender, it’s not. The VA guarantees the loan, but the actual funds come from private lenders like banks, mortgage companies, or credit unions. Because of this, interest rates, fees, and credit score requirements can vary significantly from one lender to another. A real estate agent who understands VA loans will never let you settle for the first lender you talk to. Instead, they’ll introduce you to lenders with proven VA experience and advocate for terms that fit your financial goals. Going it alone can lead to costly decisions you won’t realize until it's too late.
You Can Use the VA Loan More Than Once
Many buyers assume the VA loan is a one-time benefit. In reality, you can use it multiple times, even simultaneously under certain circumstances. Whether you're relocating due to a permanent change of station (PCS) or planning a long-term investment strategy, your agent should help you understand entitlement restoration, second-tier entitlement, and the best way to leverage the benefit throughout your life.
The No-BS Takeaway
Here’s what a great agent will do for you:
- Help you understand the true cost of the VA loan, including funding fees and upfront expenses
- Prepare you for common hurdles like appraisals, repair negotiations, and inspections
- Connect you with lenders who specialize in VA loans and offer competitive terms
- Create a long-term strategy for using your VA benefit wisely, now and in the future
The VA loan is an incredible tool, but only if you have someone in your corner who knows how to play the game.
