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VA Loan Closing Costs: What Veterans Need to Know

⚡ Quick Answer

VA loans limit what veterans can pay in closing costs. The VA funding fee (1.25-3.3% of loan amount) is the biggest expense, but it can be rolled into the loan. Sellers can cover all remaining closing costs, and disabled veterans may be exempt from the funding fee entirely.

🔑 Key Takeaways

  • VA funding fee: 1.25% (first use, no down payment) to 3.3% (subsequent use)
  • Disabled veterans (10%+ rating) are exempt from the funding fee
  • VA limits what the buyer can pay — the seller or lender must cover certain costs
  • No down payment required and no PMI on VA loans
  • VA prohibits some fees entirely (e.g., buyer cannot pay for termite inspection)
  • VA Streamline (IRRRL) refinance has minimal closing costs
VA loans offer some of the best terms available, but understanding the closing cost structure helps you maximize your benefits. ## The VA Funding Fee The VA funding fee is a one-time charge that helps fund the VA loan program: | Down Payment | First Use | Subsequent Use | |---|---|---| | 0% | 2.15% | 3.3% | | 5%+ | 1.5% | 1.5% | | 10%+ | 1.25% | 1.25% | **Exemptions**: Veterans with 10%+ disability rating, surviving spouses, and Purple Heart recipients are exempt from the funding fee. ## VA Closing Cost Limitations The VA limits what the buyer can pay: - **Buyer CAN pay**: VA funding fee, recording fees, appraisal, credit report, title insurance, origination fee (max 1%) - **Buyer CANNOT pay**: Termite inspection, settlement/escrow fees, doc preparation, notary fees ## What the Seller Can Cover Sellers can pay **all** of the buyer's closing costs and prepaid expenses on a VA loan — there is no cap on seller concessions. This is unique to VA loans. ## Related Resources - [FHA vs VA Closing Costs](/blog/fha-loan-closing-costs) — Compare programs - [Closing Cost Negotiation](/blog/closing-cost-negotiation) — Tactics for VA buyers - [Closing Cost Calculator](/#calculator) — Estimate your VA costs

❓ Frequently Asked Questions

  • How much is the VA funding fee?
    The VA funding fee ranges from 1.25% to 3.3% of the loan amount. For first-time use with zero down payment, it is 2.15%. With 5% down, it drops to 1.5%. Disabled veterans with 10%+ rating are exempt.
  • Can the seller pay all closing costs on a VA loan?
    Yes. Unlike conventional and FHA loans, there is no cap on seller concessions for VA loans. The seller can cover all of your closing costs and prepaid expenses.
  • What closing costs can a VA buyer NOT pay?
    VA buyers cannot pay for the termite inspection, settlement/escrow fees, document preparation fees, or notary fees. These must be covered by the seller, lender, or a third party.

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