Closing on a home purchase with a VA loan comes with costs and fees, and some of these expenses are paid by the buyer. Here are some of the costs and fees you can expect to pay when getting a VA loan.
The lender is allowed to charge reasonable closing costs, and these expenses may not be included in the loan. Closing costs vary among lenders. The following items may be paid by the purchaser, the seller, or shared.
- Loan origination fee
- Credit report
- Discount points
- Title search and title insurance
- Recording fees
- State and/or local transfer taxes
- No commissions, brokerage fees or “buyer broker” fees may be charged to the veteran buyer
The borrower pays the VA Appraiser fee and the VA compliance inspectors fee. The veteran does not pay for a second appraisal if the lender or seller requests a reconsideration of the value of the property.
The borrower pays the recording fees and recording taxes.
The borrower pays for the credit report obtained by the lender.
The borrower pays a portion of the taxes, assessments and other items for the current year, and the initial deposit for the tax and insurance account.
The borrower pays for the hazard insurance premium. This includes flood insurance, if required.
Flood Zone Determination
The borrower pays for the determination of whether a property is in a flood zone hazard area.
The borrower pays a fee for the survey, if required by the lender.
Title Examination and Title Insurance
The borrower pays a fee for title examination and title insurance, if applicable.
A funding fee must be paid to the VA by all veteran borrowers, but there are certain veterans who may be exempt, as determined by the VA. The funding fee can be paid in cash or financed into the loan.
The following are examples of items that can’t be charged to the veteran borrower as itemized fees and charges. The lender must cover the costs of these items.
- Loan closing or settlement fees
- Document preparation fees
- Preparing loan papers or conveyance fees
- Attorneys services other than for title work
- Interest rate lock-in fees
- Postage and other mailing charges, stationery, telephone calls and other overhead expenses
- Amortization schedules
- Passbooks and membership or entrance fees
- Escrow fees or charges
- Notary fees
- Preparation and assignment of mortgage to other secondary market purchasers
- Trustee’s fees or charges
- Loan application or processing fees
- Fees for preparation of truth-in-lending disclosure statement
- Fees charged by loan brokers, finders or other third parties
- Tax service fees
Covering Closing Costs
Closing costs are not covered by a VA mortgage. The loan amount is the purchase price or the appraised value, whichever is less. If the borrower wants closing costs to be covered by the loan, those costs must be added to increase the amount of the loan. As long as the home value appraises for the amount of the increased price, the closing costs can be added to the loan. This means the borrower is financing the closing costs over the life of the loan.