What Are Typical Closing Costs for a VA Loan?

A house with the words United States Department of Veterans Affairs and VA loan closing costs on it.Navigating VA loans involves understanding the associated closing costs, a critical aspect of the home-buying process. Prospective buyers often wonder about typical closing expenses and whether they can roll them into the VA loan.

From estimating closing costs to exploring options for wrapping them into the loan, this comprehensive guide covers the nuances of VA loan closing expenses. Delving into essential questions like who pays closing costs and whether veterans must cover them, this exploration provides insights into the financial aspects of VA home loans.

By unraveling the intricacies of VA loan closing costs, prospective homeowners can make informed decisions and streamline their path to homeownership.

Key Takeaways

  • VA loan closing costs include various fees and expenses associated with obtaining a VA loan.
  • Appraisal fees are purchased or refinanced property value of the property being purchased or refinanced.
  • Title insurance is a policy that protects lenders and homeowners against any claims or disputes regarding property ownership.
  • Loan origination charges include the essential component to consider: misunderstanding VA Closing Costs.

To understand the key factors determining the amount these expenses will pay.

VA loan closing costs include various fees and expenses associated with obtaining a VA loan. One crucial factor is the VA funding fee, which is a percentage of the loan amount and helps to offset the cost of the VA loan program.

Another factor is the down payment, as VA loans typically don't require a down payment, but if you choose to make one, it affects your closing costs.

Other fees, such as home appraisal fees, origination fees, credit report fees, discount points, and title insurance, may be included in your closing costs.

These factors will help you estimate your closing costs and make informed decisions.

Moving on to appraisal fees...

Appraisal Fees

Moving on from VA closing costs, let's delve into appraisal fees and how they factor into your overall closing costs.

When obtaining a VA loan benefit, it's important to remember that there are various closing expenses to consider. One of these expenses is the appraisal fee. An appraisal fee is the cost of determining the value of the property you're purchasing or refinancing. This fee is typically paid upfront and covers the services of a professional appraiser.

Appraisal fees are just one of the many mortgage and settlement charges you may encounter when securing a government-backed payment. It is essential to carefully review all the prices, including records, clearly and understand expenses to ensure you know your total closing costs.

Title Insurance Expenses

You must consider title insurance expenses as part of your overall closing costs when obtaining a VA loan benefit. Title insurance is a policy that protects lenders and homeowners against any claims or disputes regarding ownership of a property. It ensures that the property you're purchasing or refinancing has a clear title, free from liens or encumbrances.

Title insurance is typically the home's purchase price on the loan amount or the home's purchase price. It's important to note that applies aren't exclusive to VA loans and are also applicable to conventional mortgages.

As an eligible veteran or surviving spouse, you can expect to see these charges at closing and other fees such as property valuation, real estate appraisal, lending, and loan processing charges.

Loan Origination Charges

Considering title essential expenses in your VA loan closing costs, it's important to consider the loan origination charges. These charges include the loan origination fee and the VA appraisal fee.

The loan origination fee is a percentage of the loan amount. It covers the administrative costs of processing your mortgage property value fee, which is the cost of assessing the value of the property you intend to purchase or refinance.

It's important that the closing costs on a VA loan can be difficult for each borrower and may vary depending on factors such as the type of loan (VA home loan or interest rate reduction refinance loan) and the lender you choose

Now, with this and the loan origination charges, let's discuss the VA funding fee you must Pay.

To understand the VA Funding Fee, you must know how it affects your closing costs on a VA loan.

The Department of Veterans Affairs (VA) levies a mandatory fee known as the VA funding fee to help fund the VA loan program. It's a percentage of the loan amount and can vary depending on factors such as the type of loan and whether it's your first or sis use of the VA loan benefit.

The funding fee is an upfront payment that helps cover the costs of underwriting the loan, including the expenses associated with property title protection.

It's important to note that the VA funding fee is separate from other closing fees, such as underwriting costs and mortgage points.

Escrow and Prepaid Items

To further understand the impact on your closing costs, let's discuss the details of escrow and prepaid items concerning the VA funding fee. Here are four critical points to co

  1. Escrow Account: When you get a VA loan, an account is set up to hold funds for property taxes and insurance. The initial deposit into this account is typically required at closing.
  2. Prepaid Interest: You may need to prepay the interest on your VA loan from the day of closing until the end of the month. This ensures that your first mortgage payment is due the following month.
  3. Homeowners Insurance: As part of the homeowner's on a VA loan, you may need to prepay your homeowners insurance premium for the first year.
  4. Property Taxes: Depending on the time of year, you may be required to prepay some of your property taxes at closing.

Understanding these escrow and prepaid items will give you a clearer picture of your total closing costs on a VA loan.

Moving forward, let's now explore the next aspect of closing costs: discount points.

Discount Points

You can frequently purchase discount points to lower your interest in obtaining a VA loan. Discount or loan interest reduction points are upfront interest payments you can make at closing. Each discount point typically costs 1% of your loan amount and can reduce your interest rate by about 0.25%.

By paying discount points, you can save money on your monthly mortgage payments over the life of your loan. This can be especially beneficial if you plan on staying in your home for a long time. Discount points can be used for various purposes, including mortgage refinancing or loan modification.

When calculating closing costs for a VA loan, it's essential to consider the average VA loan closing costs and determine how much you're willing to spend on discount points.

Negotiating Seller Concessions

When negotiating seller concession, discuss discount points by considering how they are crucial to reducing closing costs. Here are four essential points to keep in mind:

  1. VA Closing Costs: If you're using a VA loan for your military home, traditional costs are higher than a conventional or non-VA loan. Seller concessions can further reduce costs, making homeownership more affordable for you.
  2. Initial Payment: You can lower your initial closing payment by negotiating seller concessions. This can free up some funds that you can use for other expenses or savings.
  3. Credit History Assessment Costs: The seller can agree to pay for the credit history assessment costs, saving you money upfront.
  4. Finalizing Costs: Negotiating seller concessions can help cover a portion of the closing costs, such as the title policy and other fees associated with completing the purchase.

Who Pays Closing Costs on a VA Mortgage? 

When getting a VA mortgage, an important question is who pays the closing costs - the buyer or seller? Closing costs include fees charged by the lender's third-party government agencies to process, underwrite, and close the mortgage loan. On a VA loan, the buyer typically pays between 2-5% of the total loan amount in closing; however, the seller can agree to pay some or all of the buyer's closing costs as part of the purchase negotiation.

VA borrowers can also finance closing costs into the mortgage loan amount. Talk to your loan officer to understand the different options for covering closing costs and how much you'll have to pay at the closing table. While paying fees upfront increases your cash outlay, rolling them into the loan means you'll pay more in interest over the life of the loan.


In conclusion, veterans and active-duty service members should understand the typical closing costs for a VA loan. Knowing about the potential fees can help borrowers prepare financially and avoid surprises at closing.

VA loans offer good terms, but it's essential to budget for expenses like appraisal fees, origination charges, and title insurance. Finding lenders who know about VA loans and are open about closing costs can help buyers.

Being informed about the expected closing costs will give borrowers confidence and help them make informed decisions about financing.

VA Funding Fee and Loan Closing Costs

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