VA Loan Closing Costs and Fees

Table of Content

• Recording Fee
• VA Loan Closing Costs: How Much You’ll Pay
• VA Appraisal Fee
$35

For example, if you’re getting a VA streamline refinance for your current VA loan, you can skip the inspection and appraisal fees because you paid for them the first time around. VA loan closing costs average around 1 to 3 percent of the loan amount on bigger home purchase prices, and 3 to 5 percent of the loan amount for less expensive homes. You’ll go through a private bank, mortgage company, or credit union—not directly through us—to get a cash-out refinance loan.

Some closing costs, like the VA funding fee and the loan origination fee, are based on your total loan amount while others are flat fees charged on any loan amount. As we mentioned before, most VA loan borrowers must pay a VA funding fee for a home purchase or refinance. The amount you pay depends on whether or are a first-time or subsequent VA loan borrower, the size of your down payment, the VA loan type and other factors. The funding fee is one expense that you can add to your loan total for a reduced upfront closing costs payment at the closing table. VA funding fees are automatically added to your loan balance on a purchase loan unless you decide to pay them out of pocket.

Recording Fee

The VA won’t allow buyers to pay attorney fees beyond title work, sales commissions for real estate agents, termite remediation letters, and lender’s fees beyond 1% of the loan amount. Closing costs range from about 1 percent to 5 percent of your home’s purchase price. Costs vary widely because some closing fees are flat while others are charged as a percentage of your loan amount. Below are some rough estimates of closing costs amounts for a VA loan. Keep in mind the types of fees and their amounts vary greatly by geographic location.

Depending on your situation, you may decide to purchase optional discount points, opt for a home inspection or owe additional homeowners association dues. If you’re buying a property with another person, you’ll each be charged a credit report fee. VA appraisal fees vary based on market demand, location and home type.

VA Loan Closing Costs: How Much You’ll Pay

The VA protects homebuyers from excessive costs by regulating real estate transactions. Sometimes sellers interpret the VA’s regulations as too complex or restrictive. However, this should not deter homebuyers who qualify for the VA loan benefit from using it. Your lender could help pay closing costs in exchange for charging you a higher mortgage rate over the life of your loan.

Some lenders may charge an origination fee or other fees to cover their costs, while others might not. You’ll also hear this called a “permanent buydown,” because you’re paying money upfront to buy a lower interest rate. This isn’t something many VA buyers do, but it’s an option and a loan-related cost.

VA Appraisal Fee

The good news is that the VA has protections for Veterans and service members that put a cap on certain fees for VA loans. You should know that adding the VA funding fee and other loan costs to your loan could lead to you owing more money than the fair market value of the home. This could reduce the benefit of refinancing since your payment wouldn’t be as low as you may want it to be.

This money “primes the pump” so to speak so that when your property taxes and insurance come due, there’s enough in reserve to pay them. The lender requires this prepayment because they want to make sure any damage done to the home will be repaired. Homeowner’s insurance is just like any insurance policy — it renews every year and will need to be paid again each year. This is an ongoing insurance policy, paid every year, on any home that is located inside a flood zone. The lender requires the home to be insured against flooding, which is not covered by the standard homeowner’s insurance policy. We’ll take a closer look at the various types of closing costs in the next section.

Can you roll closing costs into a VA loan?

They can choose to either charge you a flat 1 percent origination fee, or pick and choose among a host of fees, so long as they add up to no more than 1 percent. If the lender isn't charging the flat 1 percent fee, then VA buyers can pay some fees and charges that would otherwise be unallowable. Who pays what in closing costs and concessions is always up for negotiation. Seller concessions on VA loans are limited to 4% of the purchase price, but it’s important to understand that sellers aren’t obliged to pay any costs on your behalf. But you can always request that the sellers pay a portion, or all, of the closing costs when you’re making a formal offer on a home.

And that helps ensure you ask for the right amount of closing costs and concessions in your offer. Title insurance protects lenders and homebuyers if liens, legal defects or other title-related issues are discovered after closing. Lenders will usually require the purchase of the lender’s title insurance, which only protects their interest in the property. You should strongly consider paying the one-time fee for the owner’s title insurance to ensure you’re covered as well. Although you can’t include all of your closing costs in your mortgage, the VA does allow you to roll your VA funding fee into your total loan amount.

$35

Check out the VA’s appraisal fee guide to see the maximum you’ll pay based on county and state. Veterans who receive a funding fee refund may wish to send the refund to their mortgage servicer to apply the refund toward the principal balance of their VA-guaranteed home loan. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear.

We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. VA home loan program has been around for over 50 years and has undergone numerous changes since its establishment. The program was started in 1944 as part of the Servicemen’s Readjustment Act, which was designed to assist troops returning from war and help them readapt to civilian life.