Who Pays VA Loan Closing Costs?

Closing costs are one thing no home buyer wants to think about, but they’re a part of every home purchase whether you’re using a veteran home loan or a traditional mortgage. There are always going to be a few costs tied to getting the loan. So, who pays for the closing costs on VA home loans? Here’s what you’re expected to cover.

Origination Fees

Most lenders charge fees for extending the veteran home loan to you. For VA loans, the amount you have to pay should never be more than 1 percent of the loan’s total amount. Some lenders break the origination fee up into several smaller fees while others charge you a lump sum. You’ll know what’s expected of you before you agree to the terms of the loan.

VA Funding Fee

This fee is charged by the VA and is completely non-negotiable. Think of it as the VA’s origination fee. It’s used to help guarantee the loans and helps cover the cost of the loan guarantee program.

Appraisal

Before you can buy the house, you’ll need to get the property appraised to make sure it satisfies the VA’s requirements. The appraisal typically costs about $500 and you’ll have to cover those costs out-of-pocket before the lender will give you the veteran home loan.

Title Insurance

You may be required to buy title insurance before you can get the mortgage, even if you’re using a VA loan to buy your house. This insurance is your responsibility to cover.

Credit Report

Most lenders, even those specializing in VA loans, will want to run a credit report for each person listed on the loan. This helps them determine how much money you qualify for. You’re expected to pay for that credit report when you get the loan.

Real Estate Taxes

Using a VA loan to buy a house doesn’t exempt you from paying real estate taxes on the transaction. You may be able to roll the amount you’ll pay in taxes into your loan.