Here's when it gets really, really difficult with CalVet. If CalVet is the only option that will work for you, then be prepared to pay your own closing costs. When constructing what's described in the industry as a "VA no-no", a no-money-down-no-closing-costs purchase, the closing costs do exist and have to be paid somehow. And in that “VA no-no” scenario, closing costs will be paid for by one of two parties: the seller or the lender. In a tight market, the seller is NOT going to pay for them, and these costs can be substantial.
If you don't have any money and the seller is not going to pay for the closing costs, who’s going to pay the 1% origination fee charged by CalVet? Who’s going to pay for the appraisal, title, and escrow fees? Who’s going to contribute the funds to the new “impound account,” to budget for taxes and insurance? Someone's got to pay for all this! The seller's not going to pay for it, you don't have any money, and CalVet won’t pay for it, so you are out of luck. With traditional VA financing, interest rate choices should exist to solve this problem. It’s very common for VA borrowers to consider a higher interest rate option (than the lowest rates offered) where the lender pays for all of the closing costs. These options are a function of a complex capital market for mortgages.