A VA loan can mean zero down. But it does not mean zero closing costs.
Closing costs are the fees you pay to finalize your loan and your home purchase. The VA does not cap your total closing costs, but it does limit which fees a veteran is allowed to pay. This guide shows what VA loan closing costs include, who pays them, whether you can roll them into your loan, and how to lower what you owe at closing.
What are VA loan closing costs?
Closing costs are the lender, title, government, and prepaid fees that come due when you close on your home. With a VA loan, they include one special cost, the VA funding fee, plus the same kinds of fees you would see on most loans.
Closing costs vary with your loan amount, the property location, your lender’s fees, and your funding fee status. Many buyers see a total in the range of a couple of percent to around 5% of the home price, but yours depends on your loan, location, and lender. Your lender’s Loan Estimate gives you the real numbers.
Does a VA loan cover closing costs?
No. The VA backs your loan, but the loan does not pay your closing costs. You, the seller, a builder, or your lender may pay them, depending on what you negotiate. You will see all costs on your Loan Estimate and, at the end, your Closing Disclosure.
Common VA loan closing costs
Here is what buyers commonly see. Your lender will give you exact figures.
Cost | What it is |
VA funding fee | A one time fee paid to the VA. Some veterans are exempt. You can finance it into the loan |
VA appraisal fee | Pays for the appraisal that sets the home’s value |
Loan origination fee | What the lender charges for processing the loan. Lenders may charge up to 1% of the loan amount |
Credit report | The cost of pulling your credit |
Discount points | Optional fees you can pay to lower your interest rate |
Title search and title insurance | Protects you and the lender against title problems |
Recording fees | Government fees to record the deed and loan |
State and local transfer taxes | Charged in some areas |
Hazard insurance and property taxes | Often paid ahead of time and set aside in escrow |
Prepaid interest | Interest from your closing date to the end of that month |
Survey | If one is needed |
Costs and who customarily pays them vary by state and by contract. In Maryland, DC, and Virginia, talk to your agent about local customs.
The VA funding fee
The funding fee is the cost unique to VA loans. For a first use purchase with less than 5% down, it is 2.15% of the loan amount. It drops to 1.5% with 5% down and 1.25% with 10% down. Veterans who receive VA compensation for a service connected disability may be exempt.
See every rate and exemption on the VA funding fee chart. You can also confirm current rates on VA.gov.
Which fees can’t veterans pay?
The VA protects veterans by limiting certain fees. These are called non allowable fees. They are generally lender controlled costs, such as:
- Application and processing charges
- Broker or trustee charges
- Rate lock charges
- Document preparation charges
- Attorney fees
- Prepayment penalties
- Postage, photographs, and similar charges
On VA loans, the lender is allowed to charge a flat origination fee of up to 1% of the loan amount instead. Anything above what the VA allows must be paid by the lender, the seller, or another party, not the veteran. Because lender policies vary, ask your lender for a clear list of what you will and will not pay.
Can you roll closing costs into a VA loan?
Mostly no. On a purchase loan, you can finance only the VA funding fee into your loan amount. The VA is clear about this on VA.gov: you must pay all other fees and charges when your loan closes.
That means:
- Funding fee: You can add it to your loan or pay it at closing.
- Everything else: You pay it at closing, unless the seller, builder, or lender covers it.
Who pays closing costs on a VA loan?
It depends on what you negotiate. The VA says the buyer and seller can negotiate who pays these costs:
- Commission and fees for your real estate professional
- Loan origination fee
- Loan discount points
- Credit report and any credit balances or judgments
- VA appraisal fee
- Hazard insurance and real estate taxes
- State and local taxes
- Title insurance
- Recording fee
Sellers and builders can offer credits to cover some or all of your closing costs, and the VA does not limit credits for a loan’s closing costs. The VA does limit seller concessions, extras like a paid funding fee, to 4% of the home’s reasonable value. Learn the difference in our VA seller concessions guide.
How to lower your VA closing costs
- Ask the seller to pay. Put closing cost help in your offer. See VA loan seller concessions for how the 4% limit works.
- Check for a funding fee exemption. If you receive VA compensation for a service connected disability, you may pay no funding fee.
- Finance the funding fee. This lowers your cash needed at closing, although you will pay interest on it.
- Compare lenders. Ask each for a Loan Estimate and compare the origination fee, points, and fees, not only the rate.
- Choose your closing date wisely. Prepaid interest is charged from your closing date to the end of the month, so closing later in the month usually means less prepaid interest.
- Shop for title services. In some areas, you can choose your title company. Ask your agent.
- Ask a builder for incentives. If you are buying new construction, builder credits can cover part of your costs. Read Builder Incentives Explained.
- Put money down if it makes sense. A down payment of 5% or more lowers your funding fee. See Does a VA Loan Require a Down Payment?
VA closing costs and new construction
Buying a new build? Builders often offer closing cost help or rate buydowns, which can be a big help on a VA loan. A paid funding fee or buydown counts toward the 4% concession limit. Compare a quote from the builder’s lender and an outside VA lender. See Can You Use a VA Loan for New Construction?
Closing cost calculator
- Down payment
- $0
- Other closing costs (estimate)
- $0
- VA funding fee paid in cash
- $0
- Seller or builder credit applied
- $0
- Your loan amount
- $0
Ways to lower your cash at closing
Same home and costs, different ways to pay.
| Option | Cash at closing | Loan amount |
|---|
This is a planning estimate, not a loan quote. The funding fee uses the rates effective April 7, 2023, as published on VA.gov. On a VA purchase loan, only the funding fee can be financed. The VA limits seller concessions to 4% of the home's reasonable value from your VA Notice of Value, and this tool uses the home price as a stand in. Other closing costs vary by lender and location. Your Loan Estimate shows your real numbers. Earnest money and escrow reserves beyond your estimate are not included.
Know your numbers before you make an offer
Before you write an offer, ask your lender for a Loan Estimate and a list of what you will pay at closing. Use our free checklist to plan.
Download the free VA closing costs checklist. It has a cost worksheet, questions to ask your lender, and ideas for lowering what you pay.
Frequently asked questions
Only the VA funding fee. On a purchase loan, all other closing costs must be paid at closing, unless the seller, builder, or lender covers them.
The buyer and seller negotiate it. The seller or builder can offer credits for some or all of your closing costs, and the VA limits concessions beyond normal costs to 4% of the home’s reasonable value.
No. The VA backs the loan, but you or another party pays the closing costs.
They vary by loan amount, location, and lender. Many buyers see roughly a couple of percent to around 5% of the home price. Your Loan Estimate shows your actual costs.
Certain lender controlled fees, such as application, processing, rate lock, and document preparation charges, are not allowed. Attorney fees and prepayment penalties are also on the list. Ask your lender for the current rules.
Often, yes. The VA does not limit credits for normal closing costs. Concessions like a paid funding fee are limited to 4% of the home’s reasonable value.
Ready to plan your VA closing costs?
Talk to the Gladden Global Network team, a veteran owned agency serving Maryland, DC, and Virginia. We help veterans compare lenders, negotiate credits, and understand every cost before closing. Contact us today or call (410) 204-4070, and join our military and veteran community.
