What to Expect From VA Closing Costs
Even though no down payments are required for a VA Home Loan, there are still associated closing costs. Closing costs vary depending on the location of the property you are purchasing or the location of your lender and speaking with a VA Educator in your area will help you acquire a good idea of the total potential costs.
Some fees can be taken care of by the seller so you don’t have to worry about them. The following fees can potentially be taken care of by the seller:
Fees Taken Care of by Seller
- 1% flat charge by the lender, plus reasonable discount points to lower the rate
- Appraisal and compliance inspections – including pest inspections, water well, septic, etc.
- Recording fees
- Credit report fee
- Prepaid items – includes prorations for property taxes, insurance, and initial escrow deposits as required by lender
- Insurance – the first years hazard insurance must be paid at closing, plus flood insurance if required
- VA flood certification – third party verification to determine if a property is located within a special flood hazard area
- Any survey fees associated with selling the home
- Title examination and insurance
- VA funding fee – unless exempt each veteran must pay a funding fee to VA. If you are a disabled veteran you can be exempt from the VA funding fee.
Fees Not Taken Care of by Seller
- Administrative fees
- Loan closing or settlement fees
- Document preparation fees
- Conveyance fees
- Attorney fees other than for title work
- Rate lock-in fees (fees associated with a rate guarantee for a given period of time)
- Escrow fees or charges
- Notary fees
- Underwriting fees
- Loan application or processing fees
- Broker fees
- Tax service fees
Funding Fees and Disabled Veterans
Veterans and active military buyers receiving compensation for a service-connected disability and deemed more than 10% disabled by the VA are exempt from paying the funding fee. The VA funding fee can vary from 0.5% to 3.3% and having it waived can save you thousands of dollars in closing cost fees. To check if you are exempt, use your eBenefits portal and navigate to the disabilities page.
To learn more about funding fees and see which ones apply to you contact a VA Educator today.