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- VA Loan Benefits
- GI Bill Benefits
- VA Health Benefits
- Compensation
- VA Burial Benefits
- Locating Buried Vets
- Civil Relief Act
- Military Tax Relief
- Guard and Reserve
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Are there any costs involved?
The cost of obtaining any mortgage can be quite a lot. VA regulates those
closing costs that a veteran may be charged in connection with closing a VA loan.
No commission or brokerage fees may be charged to you for obtaining a VA loan.
However, you may pay reasonable closing costs to the lender in connection
with a VA guaranteed loan.
Although some additional costs are unique to certain localities, the closing
costs generally include VA appraisal, credit report, survey, title evidence,
recording fees, a 1 percent loan origination fee, and discount points. The
closing costs and origination charge may not be included in the loan,
except in VA refinancing loans.
In addition to negotiating the interest rate with the lender, veterans may
negotiate the payment of discount points and other closing costs with the
seller. Often, sellers will consider paying some or all of the discount points
required by the lender in order to complete the sale. This can have a big
impact on the amount of cash you must pay out of pocket in order to complete
the purchase. If the seller will not consider paving points, the veteran may
be able to negotiate an interest rate with the lender which is sufficient to
avoid the need to include any discount points in the transaction.
A VA funding fee of 2.00 percent of the loan amount (2.75 percent for reservists)
is also payable at the time of loan closing. This fee may be included in the loan
and paid from the loan proceeds. The funding fee does not have to be paid by
veterans receiving VA compensation for service-connected disabilities, or who
but for the receipt of retirement pay would be entitled to receive compensation
for service-connected disabilities, or surviving spouses of veterans who died in
service or from a service-connected disability.
If the veteran makes a downpayment
of at least 5 percent, but less than 10 percent of the purchase price of the property,
the funding fee is reduced to 1.50 percent of the loan amount (2.25 percent for
reservists). If the veteran makes a downpayment of at least 10 percent,
the funding fee is reduced to 1.25 percent of the loan amount
(2.00 percent for reservists). If a veteran who has previously
obtained a VA home loan obtains another loan with less than a 5 percent
downpayment, the funding fee is 3.00 percent of the loan amount. With a
downpayment of at least 5 percent, the funding fee is reduced to the percentages
shown above for downpayments of at least 5 percent, but less than 10 percent, and for
down payments of more than 10 percent.
Frequently asked questions about the VA home loan program:
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