What You Need to Know About VA Non Allowable Fees

By Craig Donofrio

Posted on June 9th, 2022

holding house

Because VA loans are designed to assist military families, they have special requirements and fee restrictions.

VA loans are unique for a number of reasons. A VA loan:

  • Is only available to current or former military veterans and family members.
  • Limits the amount of money a veteran can be charged for closing costs.
  • Defines which types of real estate transaction fees are allowable and which are non-allowable.
  • Allows the seller to contribute closing cost assistance, but caps the amount at 4% of the purchase price.

Here’s what you need to know about allowable and non-allowable VA loan fees.

Allowable VA Loan Fees:

Laws allow a VA buyer to pay the following fees:

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Non-Allowable VA Loan Fees

Common fees that a VA buyer cannot pay include:

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Pros and Cons of VA Loans for Sellers

For most homeowners, selling to a VA buyer is no more difficult than selling to any other type of buyer, even though the VA is more stringent in terms of appraisals and property condition.

However, if your home is in need of repairs or is considered a “fixer-upper,” a VA buyer will not usually be your best bet because the loan will either be denied or you will need to make repairs.

Selling to a VA Loan Buyer

VA loans are designed to allow military families the opportunity to purchase a home with a minimal amount of up-front cash.

To make sure sellers don’t get the short end of the stick, the VA limits how much sellers can contribute towards covering non-allowable VA fees at 4%. The VA also allows lenders to use credits and agents to use fee adjustments to cover costs.

When it’s time to sell, you need a great agent to make sure you're getting a good deal. But we don't think you should pay the 2.5-3% fee that a traditional seller's agent charges. That's why we've partnered with Clever Real Estate.

Clever is a free service that will match you with top-performing local agents who can help sell your house for just a 1% fee. You can save thousands in agent commissions. A traditional agent charges $10,00-$12,000 in fees on a $400,000 house, but Clever can help sell a $400,000 house for just $4,000. You would save up to $8,000 going with Clever!

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Posted in Mortgage, Selling a House