Does a VA Loan Cover Closing Costs?

A paper with the words closing costs written along the top of the paperAre you considering a VA loan for your home financing needs? One key aspect to understand is whether a VA loan covers closing costs. In this comprehensive guide, we'll explore the details of VA loan closing costs and shed light on whether they can be covered by the loan itself. Discover the potential benefits and savings associated with VA loans and how they can help you achieve your homeownership dreams while minimizing upfront expenses.

What Are Closing Costs?

Closing costs refer to all the fees associated with getting a mortgage loan. For most home loans, these costs include the loan origination fee, appraisal fee, and attorney fees. Closing costs can add up quickly, and for some borrowers, they can be a significant expense.

Examples of closing costs

Some of the most common closing costs include the loan origination fee, typically a percentage of the loan amount, and the appraisal fee, which is paid to appraise the home to determine its Value. Other closing costs may include title fees, recording fees, and transfer taxes.

Who pays the closing costs?

In most cases, the buyer is responsible for paying closing costs; however, in some situations, the seller may agree to pay some or all of the closing costs as part of the negotiations. Understanding who will be responsible for closing costs is essential before you get to the closing table.

It is also possible for the lender to pay the borrower's closing costs in exchange for a higher interest rate.

Are There Closing Costs on a VA Loan?

Like all home loans, VA loans come with closing costs. The good news is that the Department of Veterans Affairs regulates what fees lenders can charge VA borrowers, which helps keep closing costs manageable.

How much are VA closing costs?

VA closing costs will depend on Various factors, including the loan amount, the total loan amount, and the VA funding fee. The VA funding fee is a percentage of the loan amount that the borrower must pay at closing.

The percentage will depend on the type of loan and whether or not the borrower has used the VA loan benefit in the past. The VA funding fee generally ranges from 0.5% to 3.3% of the loan amount.

Are closing costs and fees different on a VA loan?

Yes, closing costs and fees on a VA loan may differ from other loan types. For example, VA loans may not allow some fees typically associated with other loan types, such as document preparation or underwriting fees. It's essential to work with a VA lender familiar with the unique requirements of a VA loan to ensure that you are not charged any non-allowable fees.

What Fees Are Included in a VA Loan?

VA funding fee

The VA funding fee is perhaps the most well-known fee associated with a VA loan. As mentioned earlier, this fee is a percentage of the loan amount and helps offset the cost of the VA loan program. The fee can be paid upfront at closing or into the loan balance.

Origination fee

The origination fee is a fee the lender charges for processing the loan application. This fee is typically a percentage of the loan amount and can vary depending on the lender and the loan type.

Homebuyers who use a VA loan cannot be charged more than 1% of the entire loan amount as a fee. For instance, you may only spend $2,000 in origination and processing fees for a $200,000 VA home loan.

Lenders might impose a flat fee of 1% or list their costs. However, the Department of Veterans Affairs (VA) 1% rule applies to both funding alternatives.

Appraisal fee

The appraisal fee is paid to appraise the home to determine its Value. This fee is typically based on the size and complexity of the home, and it can vary depending on the region and the appraiser.

Who Pays the Closing Costs on a VA Home Loan?

The buyer typically pays for the closing and prepaid expenses. However, the Department of Veteran Affairs allows the home seller to pay the borrower's closing costs.

The seller can agree to pay some or all of the closing costs during the negotiations. However, the seller cannot pay any fees considered "non-allowable" by the Department of Veterans Affairs.

These fees include things like document preparation fees and underwriting fees. The seller may also pay the pre-paid costs up to 4% of the sales price.

Can the buyer roll the closing costs into their loan?

No. The buyer cannot "roll" the closing costs into the loan, except for the VA funding fee.

Are there any non-allowable fees?

As mentioned earlier, some fees are not allowed on a VA loan. These fees include document preparation, underwriting, and escrow charges.

How Are Closing Costs for a VA Loan Different From Other Loan Types?

The Department of Veterans Affairs regulates what fees can be charged to VA borrowers, which helps keep closing costs manageable. This means that some fees common to other loan types may not be allowed on a VA loan, which could result in lower closing costs for the borrower.

The loan process for VA borrowers

VA borrowers' loan processes may also differ from other loan types, which could impact the closing costs. For example, the VA requires a VA appraisal, which can add costs compared to other loan types. However, this appraisal also ensures that the borrower is not paying more for the home than it is worth.

What fees are required to be paid?

As we've discussed, VA borrowers can expect to pay several fees associated with a VA loan. Some fees are required at closing, while the funding fee may be rolled into the loan balance. It's essential to work with a VA lender who can explain all the fees associated with the loan and ensure that the borrower knows their obligations.

Understanding closing costs is essential for anyone looking to purchase a home. These fees are the expenses that come with finalizing a mortgage loan and can add up quickly. VA loans, backed by the Department of Veterans Affairs (VA), have become increasingly popular among veterans and active-duty military members because of their flexible terms and low interest rates.

Explanation of What Closing Costs Are

Closing costs are a typical expense that homebuyers encounter when purchasing a property. These costs typically include fees associated with the mortgage process, such as appraisal, loan origination, and title fees.

VA borrowers may be required to pay closing costs when obtaining a VA home loan. VA borrowers must be aware of the closing costs that their loan type covers and those that they might still owe money for.

The VA loan program typically does not cover non-allowable costs like termite inspections or notary fees, so the borrower or seller is responsible for covering them. Working closely with a knowledgeable VA lender can help ensure all necessary expenses are accounted for during home buying.

Does the Department of Veteran Affairs Pay My Closing Costs?

Many veterans wonder whether the Department of Veteran Affairs (VA) will cover their closing costs when they purchase a home using a VA loan. The short answer is no. The VA doesn't pay closing costs for veterans or active-duty service members.

However, the VA has created rules around what fees veterans can and can't pay. Lenders can charge specific fees, but the seller or the lender must pay other costs. Additionally, the VA allows sellers to contribute up to a certain percentage towards the buyer's closing costs, so discussing this option with your real estate agent or lender is important.

Ultimately, it's essential to carefully review your loan documents and work with your lender to understand your closing costs and options for financing them.


In conclusion, VA loans offer an attractive option for financing a home with potential benefits that extend to closing costs. Don't miss out on the opportunity to have some or all of your closing costs covered by the loan! Take the next step today by reaching out to a trusted VA-approved lender or visiting our website to learn more about VA loans and their coverage of closing costs. With this valuable information, you can confidently navigate the loan process, explore the potential savings, and make informed decisions regarding your homeownership journey. Start your path to affordable homeownership today with a VA loan that can help cover your closing costs!


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