Fees associated with VA Loans

By Gretchen Wegrich Updated on 7/31/2017

Many prospective borrowers are curious about what VA loan fees will be charged in connection with their loan, and more specifically, how much cash is necessary upon closing.

When looking at all of the fees, many of them can be negotiated with and paid by the seller of the home. In general, VA home loan borrowers can plan on being charged for the following at closing:

Credit report fee
Compliance inspection fee
VA funding fee
Appraisal fee
Lender’s origination fee
Pre-paid taxes
Hazard insurance
Land survey
Recording fee
Title examination and insurance
Mailing and wire fees
Flood zone determination
Recording Taxes

The majority of these fees can all be rolled into the VA home loan so long as the total amount doesn’t exceed the conforming loan limit for that particular county.

As mentioned above, the seller is allowed to pay the buyer’s closing costs. However, the seller is limited by the VA and can only pay 4% of the purchase price and closing costs up to 5%. Except for the VA funding fee, all the other fees are typical of conventional and comparable loan programs.

Certain fees such as property taxes and insurance are put into escrow to cover the next year’s expenses – these costs are included in the monthly mortgage payment.

How are VA home loan fees different from other types of home loan fees?

The VA has limits on the types of fees that are allowed and how much can be charged.

Credit Report Fee
The veteran is responsible for paying the fee for the credit report obtained by the lender.

Compliance Inspection Fee
This fee covers the inspection that makes sure the property meets the relevant safety standards.

VA Funding Fee
The VA funding fee is a legally mandated fee that enables the veteran who receives a VA home loan to contribute to the cost so that the cost is reduced for taxpayers.

The reason that the fee is higher for second-time use is based on the theory that prior users have had ample time to earn equity or save money for a down payment.

Here are the funding fee costs for regular military members, National Guard, and the Reserves:

	First-time use, no down payment	First-time use, down payment of 5 – 10%	First-time use, down payment of 10% or more	Second-time use, no down payment	Second-time use, down payment of 5 – 10%	Second-time use, down payment of 10% or more
Regular Military	2.15%	1.5%	1.25%	3.3%	1.5%	1.25%
Reserves/National Guard	2.4%	1.75%	1.5%	3.3%	1.75%	1.5%

The following people are exempt from the funding fee:

Veterans who are receiving VA compensation for service-related disabilities
Surviving spouses of veterans who died from service-related disabilities or while in service
Veterans who would be eligible for service-related disabilities if they didn’t receive retirement pay

Visit Lender411's in-depth informational page on VA Funding Fees

Appraisal Fee

The borrower will have to pay the fee of a VA appraiser, who will assess the home’s value.
Lender’s Origination Fee
The lender will charge a flat 1% fee that will cover things such as settlement, document preparation and notary fees.
Pre-paid Taxes
The borrower can pay their portion of taxes and assessments for the upcoming year as well as the initial tax and insurance account deposit.
Hazard Insurance
This will appear in the monthly mortgage payment. This includes flood insurance if required.
Land Survey
This is necessary for borrowers to pay only if property lines aren’t defined in a real estate sale
Recording Fee
This is the fee for registering the mortgage/property so that it becomes a matter of public record.
Title Examination and Insurance
This fee protects the lender’s interest in the property in case the ownership is questioned.
Mailing and Wire Fees
This fee is associated with the loan’s final payout and involves mailing/wiring financial payments and documents.
Flood Zone Determination
This fee is for the determination of whether or not the property is in a flood hazard area. This assessment is made by a third party who guarantees complete accuracy.
Recording Taxes
The recording tax is a fee charged by the state to cover the expense of recording your property with the land records office.

Finding a VA-Approved Lender

When dealing with fees, borrowers are going to want to talk to their lenders to discuss options. It’s imperative that throughout the entire lending process, borrowers are matched up with a reputable, ethical lender who will help them make good decisions.

Borrowers are encouraged to do as much research as possible to receive the best loan rates and terms. Lender411 has an extensive database of VA Loan lenders that can help deal with and facilitate the terms of VA fees today.

To find the best possible rates for your future VA loan, simply fill out Lender411's VA Request a Quote form on the top of the page and receive a quote from a trusted and reputable lender near you today.