Which has lower closing costs VA or conventional loans?

Because most VA loans have a required funding fee which is considered a closing cost, A VA loan that is not exempt from the funding fee would have higher closing costs, although the VA funding fee can be financed. Typically the closing costs that are paid out of pocket will be very close. Each loan should have the same, or very close to the same, title charges, appraisal cost, property taxes, property insurance and most lenders do not charge more or less in their fees if it is a VA vs Conventional loan. HOWEVER it is important to note that if you are financing greater than 80% of the purchase price/appraised value, a VA loan does NOT have mortgage insurance AND the interest rate on a VA loan is usually much better than conventional loan rates. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Certified by the National Association of Mortgage Professionals and Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Closing costs would be about the same, however VA has a "Funding Fee" which is paid by the veteran and added to the financing. (Disabled Vets are exempt from this funding fee). Also, VA mandates that the veteran is not allowed to pay for certain costs and fees, even though those charges are legitimate. So to answer you question, Costs are the same with the exception of the funding fee, and WHO pay's the fee is different with VA having the benefit.. Of all the different loan products out there, VA has the best overall program.. lower interest rates, more strict appraisal standards, certain fees cannot be charged to the veteran, and no mortgage insurance.. Overall VA is the best type of loan product... .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

All costs not associated with mortgage will be the same regardless (Title, Escrow, Recording, Ect) of VA or Conventional financing.In regards to the mortgage related costs the VA program requires a funding fee where the conventional loan does not. However the VA loan is $0 down and does not require mortgage insurance paid monthly or otherwise. VA/FHA financing also will have a much lower interest rate when compared to conventional financing in just about every case. With a conventional loan if you were to only put down 5% (minimum) to 15% you will have to pay mortgage insurance either monthly or in one lump sum at closing (similar to the VA funding fee). Depending on your credit score you will also (almost certainly) be offered a higher rate for the conventional financing.Essentially unless you plan on providing 25% down towards the purchase (or have 25% in equity) and have a 760 FICO score the VA financing will almost certainly be the most cost effective option.

Bert Carpenter brought up the very important point that with a VA guaranteed loan most borrowers will have a funding fee financed into the loan that makes the closing costs much higher than with a conventional loan at 5% or more down payment. You can however, lower your out of pocket closing costs much more easily with lower credit scores (i.e. < 680 fico) on a VA guaranteed loan. Obviously with 0 down a VA loan can not be beat in terms of requiring the lowestamount of money to bring to escrow. Also, not having to pay monthly mortgage insurance is very nice savings! If you have the 20% down payment and good credit a conventional loan could be more desirable in some parts of the country wherein there are multiple bids on every home for sale. In those circumstances sellers preferconventional loans to VA loans.

Potential out of pocket closing costs should be very similar...if the VA funding fee is financed