MILITARY & VA
Who pays closing costs on a VA loan?
By Steve Lockhart
The short answer
Closing costs are the collection of fees behind the scenes of the purchase: lender fees, the appraisal, title work, escrow, recording, and pre-paid items like taxes and insurance. On a VA loan, who pays what is one of the most negotiated and most regulated pieces of the deal.
Full answer
Closing costs are the collection of fees behind the scenes of the purchase: lender fees, the appraisal, title work, escrow, recording, and pre-paid items like taxes and insurance. On a VA loan, who pays what is one of the most negotiated and most regulated pieces of the deal.
The general shape: the buyer is allowed to pay the usual costs, and the seller can contribute up to 4 percent of the loan amount in concessions, which is a generous allowance that frequently covers most of the buyer's costs in this market. The VA also protects veterans by prohibiting certain fees from being charged to the buyer at all, which shifts those costs where the contract allows.
The funding fee, if it applies, can be financed into the loan rather than paid at closing, and the pre-paid items such as property taxes and homeowners insurance are funded at closing no matter who pays them, because they are not really costs, they are money set aside for the year ahead.
The honest advice: closing costs are a negotiation line in the contract, not a fixed bill. In a market where sellers are competing for buyers, a well-structured VA offer with seller concessions can bring the out-of-pocket number very close to zero, and that is a strategy we build on purpose, not by luck.
Go a little deeper
Frequently asked
Questions service members often follow up on
What is the 4 percent seller concession exactly?
The seller may pay up to 4 percent of the loan amount toward the buyer's closing costs, pre-paids, and other allowed items. It is capped, so we price the offer with that limit in mind instead of promising more than the rules allow.
Which fees is the veteran prohibited from paying?
The VA lists specific fees that cannot be charged to the veteran buyer, including the buyer's attorney fee in many cases and certain lender and settlement fees. A VA-experienced lender and title team know the list, and we make sure it is respected line by line.
Can the closing costs just be added to the loan?
Some costs can be financed through higher pricing or credits, but not all of them can simply be rolled in, because the loan cannot exceed appraised value. We run the real options so you choose between seller concessions, lender credits, and out-of-pocket funding with the actual numbers.
The Lockhart Method
The Lockhart Method
Your Home | My Strategy | Proven Results
My strategy: negotiate the cost split before the offer, not at the closing table. We target seller concessions up to the VA limit, vet every fee against the VA's prohibited list, and show you the true out-of-pocket number before you commit to anything.
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