va home loan closing costs

VA Loans

A Closer Look at VA Home Loan Closing Costs

When you’re buying a new home with your family, the last thing you want to think about are your closing costs. Closing costs are expenses and charges related to securing your home purchase. A large portion of them needs to be paid before you get the keys to your new home. However, the VA mortgage program does a great job restricting what veterans are forced to pay in closing costs. 

What You Need to Know About Closing Costs

You don’t need a down payment to get a VA loan. However, you will be responsible for paying the closing costs. You can either pay them in cash or use seller/lender credits to cover them. 

It’s normal to be a little confused when it comes to closing costs. Here we answer some of the questions you might have about VA home loan closing costs to help you better understand how they work.

How Much Are VA Closing Costs?

VA closing costs are typically around 1% – 3% of the loan cost on greater home buy costs, and 3% – 5% of the loan for more affordable homes.  

Can You Avoid Paying Closing Costs?

Who actually ends up paying for your closing costs depends on what you can negotiate with the person selling you the home. The seller may pay a part of your closing costs. Seen as a seller concession, this is restricted to 4 percent of the sale price of the home. Your realtor can also pay some closing costs as a credit at the closing table. Your lender can pay some or all of your closing costs with a lender credit. 

If you can’t afford to pay the closing cost, tell your real estate agent that you’re buying your home with a VA loan. Your agent might be able to request that the seller cover some or all of your closing costs.

Types of Closing Costs

One of the greatest benefits to VA loans is that the VA limits the fees that lenders can charge. Here are a few examples of what types of closing costs you might encounter:

Upfront Funding Fee

This goes straight to the VA to cover the costs of the program. Generally, VA homebuyers opt to finance this fee into their loan amount. In that case, it won’t increase your out-of-pocket expenses. 

1% Origination Fee

The VA limits how much the lender can be compensated on VA home loans to 1% of the loan amount. This is to pay for the lender’s services in full. Processing fees and other items may not be charged to you beyond this 1% fee.


Ready to get started on your VA home loan application? 

VA loans are a great way for veterans to get access to financing their home. If you’re ready to apply for your VA loan, contact us today to make your dream home into a reality!