VA Loan Fees
Many VA-eligible borrowers wonder what fees will be charged with a VA loan and how much cash is needed at closing.
VA borrowers may be charged for the following at closing, as applicable
- VA funding fee
- Credit report fee
- Appraisal fee
- Compliance inspection fee
- Lender’s origination fee
- Reasonable discount points (if applicable)
- Pre-paid taxes
- Assessments and insurance
- Hazard insurance
- Flood zone determination
- Land survey
- Title examination and insurance
- Recording fee
- Recording Taxes
- Mailing and/or wire fees
- Other fees permitted by VA
Roll Some Fees into your VA Mortgage
Some of these fees can be rolled into the VA mortgage as long as the total amount does not go over the conforming loan limit for the county in which the VA property being mortgaged is located. Ask your VA loan specialist which fees can be rolled in for VA refinances and VA purchases. With purchases, the seller is allowed to pay all of buyer’s VA-approved closing costs. Additionally, the VA limits seller-paid concessions for VA home loans to 4 percent of the purchase price.
The government requires the VA funding fee and lenders must collect the funding fee for most VA home loans. The funding fee goes to the VA, and helps defray some of the cost of administering the program. The VA funding fee varies from .5 percent to 3.3 percent depending on the VA borrower’s circumstances and the type of VA loan being processed. Certain disabled veterans and surviving spouses are exempt from the VA funding fee.
VA Loan Common Fees Include Credit Report and Appraisal
Unlike the VA funding fee, which is unique to VA home loans, the other fees expected to be paid by VA borrowers are typical of most mortgage programs. Fees like the credit report fee, appraisal fee, and compliance inspection are all similar costs found at closing of conventional and comparable loans.
It is also common for VA lenders to charge origination fees of up to one percent of the loan. Also, lenders may charge one or two rate reduction (or “discount”) points.. States may have limits on origination and point reduction fees for VA and other home loans. The total amount of origination and rate reduction fees combined with other fees cannot exceed the state limit, if there is one. Depending on the circumstances, it is possible to see no origination or point reduction fees at a VA mortgage closing.
Additionally, at closing there are certain amounts collected that are put into escrow to cover a proportionate amount of the coming year’s expenses. After closing, the services collects, monthly, for charges like property taxes, and hazard insurance, and then pays those when they come due on behalf of the borrower. These items are often included in the monthly mortgage payment.
Flood insurance may also be collected if the property being financed is deemed to be in a flood zone.
Sometimes a land survey is necessary a survey was performed in connection with a real estate sale. If not paid in another manner, survey charges would appear in the closing costs of a VA loan.
There are several fees associated with the title company as well. Title examination and insurance, recording fee and mailing/wire fees are common in most closings, including VA mortgages. The closing agent is responsible for recording the deeds in the official records. . And, often, a mail or wire fee is associated with the final payout of the loan. The closing agent may charge closing fees for its services at closing.
This list does not include all fees a borrower may pay to obtain a mortgage loan. Other fees may apply, and may vary depending upon circumstances.
What sets VA home loans apart from other types of mortgages is that the VA sets limits on the type of fees allowed, and in some instances, how much can be charged. For more information about VA loans and the fees associated with them, contact a VA home loan professional.
Two Steps CloserTo Start Your VA Home Loan
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