VA Loan Closing Costs: What You Actually Pay At The Table

Plan on 2 to 4 percent of the purchase price in closing costs on a VA loan before the funding fee, plus prepaid taxes and insurance on top of that. On a $300,000 house that is roughly $6,000 to $12,000 of fees, and usually another $2,000 to $4,000 of prepaids and escrow.

Here is the part that surprises people: how much of that you personally pay is negotiable, and on a lot of my files the veteran brings nothing to the table at all. The seller can pay, the lender can pay, and the funding fee can be financed. This page walks every cost, who is allowed to pay it, and how veterans get to a closing with little or no cash.

Last reviewed October 4, 2026.

What closing costs actually run on a VA loan

Closing costs fall into three buckets, and keeping them separate is what makes a Loan Estimate readable.

• Lender charges. The origination charge, and discount points if you buy the rate down. VA caps the lender’s own flat charge at 1 percent of the loan amount.
• Third-party services. Appraisal, credit report, flood determination, title search, title insurance, recording, pest inspection where one is required. These are real costs paid to other companies and they are charged whether or not the lender takes an origination fee.
• Prepaids and escrow. Not fees at all. This is your own money going forward into property taxes, homeowners insurance and prepaid interest.

Typical ranges on a VA purchase, with the caveat that every market and every title company is different:

Dollar figures here are illustrations of how the costs work, not a quote. Your actual numbers come from a Loan Estimate.

Take the 30 second mortgage quiz to see if you qualify

The VA funding fee: rates, exemptions, financing it

The funding fee is a one-time fee that helps fund the VA home loan guaranty program, which is what lets lenders make these loans with no down payment and no monthly mortgage insurance. It is not mortgage insurance. It does not protect your lender the way PMI does on a conventional loan. The VA guaranty does that, and the fee helps pay for the program that provides it.

Current rates on a VA purchase, effective April 7, 2023 and still current today (VA.gov funding fee rates):

• First use, less than 5 percent down: 2.15 percent
• First use, 5 percent down: 1.5 percent. 10 percent or more down: 1.25 percent
• After first use, less than 5 percent down: 3.3 percent
• IRRRL (streamline refinance) and loan assumption: 0.5 percent
• Cash-out refinance: 2.15 percent first use, 3.3 percent after

You pay no funding fee at all if you are receiving VA compensation for a service-connected disability, if you are entitled to that compensation but take retirement or active-duty pay instead, if you receive Dependency and Indemnity Compensation as a surviving spouse, if you have a proposed or memorandum rating before closing, or if you are active duty and provide evidence of a Purple Heart on or before closing. Note the second one. Plenty of veterans assume they owe the fee because no check is arriving, when entitlement alone exempts them.

Rates, exemptions and the refund process are covered in detail in my guide to the VA funding fee, including how to get a fee refunded when a rating comes through after closing.

What a lender may charge you, and what it may not

VA is unusually specific here. The lender may charge you a flat charge of up to 1 percent of the loan amount, plus reasonable and customary amounts for the itemized fees VA lists, plus reasonable discount points.

This is where the old "it is either-or" shorthand misleads people, so let me be precise. The either-or applies to lender-side charges. Customary third-party costs, such as the appraisal, credit report, flood determination, title work and recording, are charged either way. They are not the lender’s fee, and VA names them as allowable itemized charges you may pay.

The full fee-by-fee breakdown, including what lands in the unallowable column and how to challenge a charge that should not be there, is in what lenders can and cannot charge on a VA loan.

Seller-paid closing costs and the 4 percent concession rule

Most of the "I brought nothing to closing" VA files run through this section, and most of the confusion in the real estate world lives here too.

A seller paying your closing costs is not a concession in VA’s eyes. There is no 4 percent cap on that. The 4 percent limit applies to concessions, which is a different list.

Concessions include the seller paying your funding fee, prepaying your taxes and insurance, paying extra points for a permanent buydown, funding a temporary buydown, giving you a gift such as an appliance, or paying off your credit balances or judgments. Ordinary closing costs and market-rate discount points sit outside the cap.

What that means in practice: an agent who tells you "VA only allows 4 percent in seller help" is quoting the wrong rule at you, and it can cost you the deal. Write the offer so the seller pays closing costs, and keep the concession list for what actually belongs there.

Not sure how much seller help your offer can ask for? Take the 30 second quiz

Lender credits, and when a higher rate is the right trade

A lender credit is the mirror image of discount points. Instead of paying money for a lower rate, you accept a slightly higher rate and the lender pays part of your costs.

It is a trade, not free money, and the way to judge it is the same break-even math you use on a refinance: how much cash does the credit save you today, and how much does the higher payment cost you each month. If you are stretched on cash and plan to refinance when rates come down, a credit often wins. If you are keeping this loan a long time and have the cash, it usually does not.

Seller credits do not have to go toward closing costs either. My temporary buydown calculator shows what the same money does to your payment if it buys the rate down instead.

Prepaid taxes, insurance and escrow

This is the line that blows up budgets, because it is not a fee and nobody warns you about it. At closing you prepay a year of homeowners insurance, you fund an escrow account with several months of taxes and insurance, and you pay interest from your closing date to the end of the month.

Many loans require an escrow account, and VA lenders generally require one on a zero-down loan. Escrow waivers exist on some programs and with some lenders, so whether you can waive is a program and lender question, not a VA rule.

Get a real tax and insurance quote before you write an offer. A house with a recently reassessed tax bill can need a thousand dollars more at closing than the identical house one street over.

Which costs can and cannot be financed

On a VA purchase the answer is narrower than most buyers expect. The funding fee can be added to the loan. Other closing costs cannot simply be rolled into a purchase loan, because the loan amount is tied to the purchase price or the appraised value, whichever is lower.

That is why the real cash-saving levers on a purchase are seller-paid costs and lender credits rather than financing. On a refinance the rules are different, and an IRRRL can carry allowable costs and up to two discount points into the new balance.

The full version of this question, with the exceptions, is in can you roll closing costs into a VA loan.

How much cash you actually need at closing

Cash to close is not the same number as closing costs. It is closing costs, plus prepaids and escrow, minus everything someone else is paying, minus your earnest money and anything you already paid out of pocket such as the appraisal.

Three ways veterans legitimately get that number to zero:

• The seller pays closing costs, which is not capped by the 4 percent concession rule
• The lender covers costs through a credit, priced into the rate
• The funding fee goes into the loan instead of being paid at the table

Put all three together on the right file and you get the closing veterans tell their friends about: no down payment and nothing due at closing. It is not a gimmick, it is the program working the way it was designed.

Reading the closing-cost sections of your Loan Estimate

Every cost on this page shows up on page 2 of your Loan Estimate, grouped into sections A through J. Section A is what the lender is charging, which is where the 1 percent rule bites. Section B is services you cannot shop for, C is services you can, and F and G are your prepaids and escrow.

If a quote looks high, compare section A against another lender before you compare rates. I walk through a real form line by line in how to read your VA Loan Estimate.

Send me your Loan Estimate and I will tell you if the numbers are reasonable

An Ohio example: prorations and the conveyance fee

Local custom moves these numbers more than most buyers realize, so here is my home state as an example. Ohio charges a conveyance fee on taxable transfers of real property, set by the state with an additional permissive amount in most counties, and statutory exemptions apply to certain transfers. By custom the seller usually pays it, which is one reason Ohio closings often look cheaper on the buyer side than the national averages suggest.

Ohio also pays property taxes in arrears, so tax prorations at closing can swing a thousand dollars in either direction depending on the closing date. I break that down in how Ohio tax prorations work.

If you are buying in another state, the structure on this page still applies. What changes is who pays title and transfer tax by custom, and how your county handles property taxes.

Frequently asked questions

How much are closing costs on a VA loan?

Generally 2 to 4 percent of the purchase price before the funding fee, plus prepaid taxes and insurance. The funding fee adds 0 to 3.3 percent of the loan amount depending on your use and down payment, and most borrowers finance it rather than paying it at closing.

Do you pay closing costs on a VA loan?

Someone does, but it does not have to be you. VA allows the seller to pay your closing costs with no 4 percent limit, and a lender credit can cover the rest. Many of my VA purchases close with the veteran bringing nothing but earnest money.

Can the seller pay the VA funding fee?

Yes, and unlike ordinary closing costs the funding fee counts as a seller concession, so it is measured against the 4 percent concession limit.

What closing costs can a veteran not pay on a VA loan?

The lender cannot charge you separately for its own overhead: loan processing and application fees, underwriting, document preparation, closing or settlement fees, notary, escrow fees, rate lock fees, the lender’s own appraisal or inspections, and attorney fees other than title work. Those come out of the lender’s 1 percent flat charge.

Is the VA funding fee the same as mortgage insurance?

No. There is no monthly mortgage insurance on a VA loan. The funding fee is a one-time fee that helps fund the loan guaranty program, and the guaranty is what protects the lender against loss.

Can closing costs be included in a VA loan?

The funding fee can be financed on a purchase. Other closing costs generally cannot, because the loan is limited to the purchase price or appraised value, whichever is lower. On a refinance, allowable costs can usually be carried into the new loan.

Is the VA appraisal fee refundable if the deal falls apart?

Usually not, because the appraiser has already done the work. VA does require the lender to refund its 1 percent flat fee if the loan does not close, for any reason, including you moving the file to another lender.

Questions about a specific quote? Call or text me at 937-572-3713, or send the Loan Estimate to [email protected] and I will tell you which numbers are normal and which ones are not.