VA Loan Closing Costs | How Much You’ll Pay | List of Possible Closing Costs | VA and Lender Fees | Prepaid Fees | Third-Party Fees | Non-allowable Fees | How to Save on Closing Costs
| 💰 How Much Are VA Loan Closing Costs? 💰 VA loan closing costs, including the funding fee, are generally 6–10% of the loan amount. It’s paid at closing when you sign the final paperwork for your home mortgage. For a home loan of $300,000, you’d pay between $18,000 and $30,000 in closing costs. |
Veterans Affairs (VA) loans can help veterans and active-duty military members get into a house without a down payment, but closing costs can be a wild card. So, how much can you expect to pay for VA closing costs?
Closing costs vary based on the property and the area, but the average amount is between 6–10% of the loan amount.
If you’re budgeting for a home purchase, it’s important to understand how VA loan closing costs work so you can estimate what you’ll pay.
We recommend working with a trustworthy buyer’s agent who has experience helping veterans and active military find their next home. before can also help you negotiate to pay only what you have to.
What Are VA Closing Costs?
In general, closing costs are fees that buyers and sellers pay to their agents and third parties (lenders, title companies, appraisers, attorneys, home inspectors, etc.) when they close on a house.
VA loans have their own specific closing costs that include fees and expenses veterans and active military pay to get a VA loan when they close on a home. These closing costs are different from typical closing costs from other lenders, in part because there are limitations on which fees the VA says lendees can pay.
How Much Are VA Closing Costs?
VA closing costs generally range from 6% to 10% of the loan amount, but they vary depending on the home’s value, the lender, local laws, HOA and neighborhood fees, and the down payment amount.
Buyers, sellers, and their agents work out who will pay certain closing costs during the negotiation period.
List of VA Closing Costs
VA closing costs are similar to regular closing costs, including lender fees, prepaid fees, and third-party fees.
But the VA limits the amount and types of fees lenders can charge with a VA loan — these are non-allowable fees. VA closing costs include a funding fee unique to a VA home loan.
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When you apply for a mortgage, your lender has three days to give you a good faith estimate (GFE), a mortgage loan estimate that includes closing costs. The estimate will also include information about the loan, such as the amount, term length, interest rate, monthly payment, and origination fees.
Most closing costs must be paid at the time of closing. However, you can roll the funding fee into your mortgage loan, though this will slightly increase your monthly mortgage payment and add interest.
VA and Lender Fees
VA Appraisal Fee
VA appraisal fees vary by state, but you should plan on paying $600 or more. It falls into the POC (paid outside of closing) category, so this is an upfront cost. The appraisal determines the home’s fair market value and verifies that the property meets minimum property requirements for a VA loan.
Your lender typically requests and schedules the appraisal. However, you should note that a VA-certified appraiser must do the VA appraisal.
VA Funding Fee
The VA funding fee ranges from 1.40% to 3.60% of the home’s sale price. These funding fees are unique to VA loans, which don’t require money towards a down payment.
It’s a one-time fee, and the amount depends on how much you’re putting down and whether or not you’ve used the VA loan program before. The more you put down, the lower your funding fee. You’ll also pay less if it’s your first time using a VA loan.
In some cases, you won’t have to pay the funding fee at all. You don’t pay the funding fee if you’re:
- Eligible for VA compensation for a service-related disability
- The surviving spouse of a Veteran who died in service or from a service-related disability
- A Purple Heart recipient
Discount Points (Optional)
One discount point costs 1% of the loan amount. The value can vary, but one discount point generally lowers your rate by 0.25%.
It’s a way to lock in lower interest rates and pay less on your loan over time. For example, suppose you paid $3,000 for one discount point on a $300,000 house to lower your interest rate by 0.25%. The lower interest rate could save nearly $17,000 over a 30 year mortgage — which makes sense if you can afford the upfront cost.
Origination Fee
VA loan origination fees are 1% of the total loan amount. You won’t pay more than this because the VA limits how much lenders can charge to cover origination, processing, and underwriting costs.
Prepaid Fees
Although most closing costs are paid at closing, there are some prepaid fees you might have to pay in advance, like insurance premiums. Here are some of the most common prepaid fees included in closing costs:
- Flood and Hazard Insurance Premiums: Premiums to set up flood and hazard insurance
- Homeowners Association (HOA) Dues: The amount you pay to join the local HOA for your new neighborhood (if they have one)
- Per-diem Interest: A fee for any daily interest that accrues between the closing date and the first mortgage payment period
- Prorated Homeowners’ Insurance Premium: The fee you pay to set up homeowners’ insurance
- Prorated Real Estate Taxes: Property taxes the buyer and seller pay during closing depending on when in the tax year the property transfer occurs
Third-party Fees
Other closing costs can range from 2% to 4% of the loan amount. This fee can cover additional services and fees that go along with getting a home loan, including a credit report, title search and insurance, homeowners insurance, taxes, and recording fees.
- Credit Check Fee: A $30–50 fee paid to a credit bureau company to run a credit check
- Home Inspection Fee: A $300–1,000 fee paid to a home inspector to examine the home for any possible problems
- Survey Fee: An $85–600 fee paid to a survey company to verify the property lines during closing
- Title Fees: Fees paid to a title company to find any issues with the property title, adjust the title for the transfer of ownership, and insure the new title
Non-allowable Fees
One advantage of getting a VA loan to buy a home is that the VA does not allow you to pay certain fees, which can significantly lessen your closing costs. But what closing costs are VA buyers not allowed to pay? Here are the most common:
- Application Fee: A fee for processing a loan application
- Escrow Deposit: A deposit that goes into your escrow account to open it
- Lender Document Preparation Fee: A fee the lender charges for drafting legal documents during closing
- Lock-in Fee: A fee to fix a mortgage rate for a certain amount of time
- Notary Fee: A fee to have a legal document notarized
- Real Estate Commissions: The commission for both the listing and selling agents
- Underwriting Fee: A fee the lender charges to take on the financial risk of giving you a loan
Next Steps: Talk to an Expert
When you’re buying a home, closing costs can add up to a significant expense. That’s why we recommend working with an experienced buyer’s agent who can help you watch for the non-allowable fees and negotiate with sellers on your behalf. Since the seller will cover all realtor commissions, there’s no downside to working with a realtor!
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Frequently Asked Questions About VA Loan Closing Costs
Who pays closing costs on a VA loan?
The buyer, the seller, and the lender all pay different closing costs when a buyer takes out a VA loan, but the biggest portion tends to fall on the buyer. Also, the VA doesn’t allow the seller to pay more than 4% of the total loan amount in closing costs. Learn more.
What closing costs are VA buyers not allowed to pay?
Home buyers who take out a VA loan are not allowed to pay certain closing costs like application fees, escrow deposits, lender document preparation fees, lock-in fees, notary fees, real estate commissions and underwriting fees. Learn more.
Can the seller pay the VA funding fee?
The seller can pay the VA funding fee, as well as VA closing costs up to 4% of the home loan amount. Learn more.