VA Loan Closing Costs

When you buy a home using a VA loan, or assume an existing VA loan from a current homeowner, you will encounter closing costs. These are the one-time fees that are paid at the end of the transaction when the loan is finalized and ownership transfers.

For most borrowers, VA loan closing costs typically fall in the range of about 3% to 5% of the loan amount. Within that total, the VA funding fee is usually the single largest item. This is a one-time charge paid to the Department of Veterans Affairs to help keep the VA home loan program running. The exact percentage for the funding fee depends on:

• Whether this is your first time using a VA loan or a subsequent use
• How much you put down, if anything
• The type of service (for example, active duty or Reserve/National Guard)
• Whether you are buying or refinancing

Some borrowers do not pay the VA funding fee at all because they qualify for an exemption, typically due to a service-connected disability rating or certain other VA-defined circumstances. When an exemption applies, overall cash needed for closing can be meaningfully lower.

Beyond the funding fee, VA closing costs include familiar items you would see on most other mortgage types. Common examples are:

• Lender charges, such as an origination fee or flat lender fee
• Third-party charges, including the appraisal, credit report, and any required inspections
• Title-related costs, such as title search, title insurance, and settlement or closing fees
• Recording fees and transfer taxes where applicable
• Prepaid items, like interest from the closing date to the end of the month, and initial deposits into your tax and insurance escrow account

With VA loans that are assumable, closing costs still apply when a buyer steps into the seller's existing VA mortgage. The structure is similar: the buyer covers standard lender and third-party costs, and the VA funding fee may apply to the assumption unless the buyer is exempt. The total cash needed can sometimes be lower compared with getting a brand-new loan, because the existing loan terms and balance are carried over, but buyers should still plan for meaningful closing expenses.

Regardless of whether the VA loan is new or assumed, you will receive a Loan Estimate from the lender within three business days after you complete a full application. This document breaks out every projected cost, including who is expected to pay each fee. Before closing, you receive a Closing Disclosure that reflects the final, agreed-upon numbers.

One of the advantages of VA financing is how flexible the rules are around who can pay which closing costs. That flexibility is important both for new VA loans and for VA assumable loans where a buyer is taking over an existing mortgage.

VA guidelines allow the seller to pay all of the buyer's standard, loan-related closing costs. In addition, the seller can provide up to 4% of the home's reasonable value in what the VA calls "concessions." These concessions can cover items such as:

• Prepaid property taxes and homeowner's insurance
• Payoff of certain buyer debts to help meet qualification standards
• Payment of the VA funding fee
• Other costs that are not typical closing fees but help the buyer complete the purchase

Seller-paid costs and concessions are a powerful tool in negotiations. For example, in a slower market a buyer using a VA loan might request that the seller cover most or all of the allowable costs instead of lowering the purchase price. In a competitive market there may be less room to negotiate, but it still makes sense to structure your offer so that you are clear about which costs you are asking the seller to pay.

There are also VA-specific limits on certain lender fees. For instance, lenders can generally charge either a single flat fee up to 1% of the loan amount or itemized fees that are considered reasonable and customary. Some charges that are common on other loans, such as certain attorney fees or processing add-ons, may not be billed directly to a VA borrower. Understanding these rules helps you spot unnecessary or duplicative fees before you agree to them.

To keep your VA closing costs as low as possible, consider a few practical steps:

• Compare offers from more than one VA-approved lender to see how their fee structures and interest rates differ.
• Ask every lender for a written explanation of fees that are unfamiliar or that seem higher than expected.
• Work closely with your real estate agent to shape your offer so that seller-paid closing costs and concessions are used strategically.
• Check carefully whether you qualify for a VA funding fee exemption and provide documentation early in the process if you do.
• Review your Loan Estimate and, later, your Closing Disclosure side by side and question any changes that are unclear.

Handled thoughtfully, VA closing costs do not have to be a barrier. Whether you are taking out a new VA mortgage or assuming someone else's, a clear understanding of which fees are required, which are negotiable, and who can pay them allows you to structure the transaction in a way that protects your cash and supports your long-term financial goals.