VA Loan Closing Costs & Fees
Closing costs include a variety of fees paid at or prior to closing on a home loan. Homebuyers can find closing costs confusing because the term “closing costs” is broad and is used to describe many different costs and fees associated with purchasing a home and applying for a mortgage loan. This can make it difficult to plan and save to buy a home.
Within the VA loan closing costs, there are expenses related to the VA loan and then there are expenses related to the home purchase, not the loan application process.
Home Purchase Closing Costs
These are closing costs that may be associated with the purchase of a home with a VA loan.
- Daily Interest Charges
- Homeowners Association (HOA) Fees
- Homeowners Insurance
- Home Warranty Fees
- Prepayment of Property Taxes
- Real Estate Commissions
- Recording Fees
VA Loan Closing Costs
These are closing costs that may be incurred by the VA loan application process.
- Appraisal Fee
- Credit Report
- Discount Points
- Origination Fee
- Pest Inspection
- Septic Inspection
- Title Charges
- Well-Water Inspection
- VA Funding Fee
An advantage of the VA loan benefit is that sellers can pay all of the closing costs associated with the VA loan process. This would include the appraisal fee, credit report, discount points, etc. Sellers are not required to pay these closing costs, so it is up for negotiation between the buyer and seller.
Another benefit of the VA loan benefit is that sellers can pay up to 4% of the home purchase price in “seller concessions.” These seller concessions can include closing costs not associated with the VA loan application process, including daily interest charges, HOA fees, homeowners insurance, etc.
Common seller concessions include covering the origination fee, appraisal fee, title insurance, and property taxes.
VA Loan Non-Allowable Fees
The VA loan benefit is designed to make homeownership more affordable for qualifying veterans and servicemembers. One of the many ways the VA accomplishes this is by restricting military veterans and servicemembers from paying certain fees associated with the VA loan.
VA loan homebuyers are not allowed to pay for certain fees and costs. These are called non-allowable fees and these include:
- Fees for additional appraisals requested by the lender or seller for a Reconsideration of Value.
- Fees for appraisals requested by anyone other than the veteran or seller.
- Fees for a flood zone determination by the lender or appraiser.
- Non-title related attorney fees
- Real estate broker or agent commissions or fees.
Check Your VA Loan Eligibility
Ready to determine your VA loan eligibility? VeteransLoans.com is a VA-approved lender that specializes in VA loans and also offers conventional and FHA products. Our loan specialists can help you determine your VA loan eligibility and get you pre-qualified. Call 1 (888) 232-1428 to speak with a loan specialist today.