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VA loans are one of the best things you get for serving in the military. No down payment, no private mortgage insurance, and interest rates that are competitive. But I talk to people who are trying to buy a house every day who are shocked by the closing costs. That's the last thing you need.
I've helped veterans with mortgages for a long time, and I've seen too many people be surprised by what they'll actually need to bring to the closing table. The good news? VA loans have built-in protections that keep your costs lower than regular mortgages. The VA actually limits some fees and doesn't allow others at all.
VA lending is picking up speed in 2025. The U.S. Department of Veterans Affairs says that the total number of VA loans made in the first half of fiscal year 2025 was 45% higher than in the same time period in 2024. Almost 10% more people are taking out purchase loans, and almost 150% more people are refinancing. That tells me that veterans are using their benefits more than ever, and knowing the costs upfront helps you make better choices.
This guide explains in detail what you'll have to pay, what you won't have to pay, and how to cut down on your out-of-pocket costs. We'll talk about everything from the VA funding fee to the cost of an appraisal. I'll also share tips I've used with thousands of borrowers to lower their closing costs in a legal and smart way.
Let's look at the big picture first. The closing costs for a VA loan aren't set in stone; they depend on how much you borrow, where you buy, your lender, and your own situation. But knowing how things are in general can help you plan your budget.
The Consumer Financial Protection Bureau says that the average closing costs for all types of mortgages were $6,000 in 2022. From 2021 to 2023, the average total loan costs in the mortgage market went up by more than 36%. This was because credit report fees, title insurance costs, and other third-party fees went up.
The Department of Veterans Affairs sets strict limits on what lenders can charge you, which is what makes VA loans different. While regular borrowers can pay as much as they want in origination fees, yours are limited to 1% of the loan amount. And a lot of fees that regular borrowers have to pay? You don't have to pay them at all.
Let me give you real examples to make this concrete. On a $250,000 VA loan as a first-time VA borrower with zero down payment, you'd face:
Your total could range from $10,000 to $12,000, but remember, the VA funding fee can be rolled into your loan amount, reducing what you need at closing. Plus, you can negotiate seller concessions to cover many of these costs.
On a $400,000 loan, scale those numbers up proportionally. Your funding fee would be $8,600, origination capped at $4,000, and other costs adjusted for the higher loan amount and property value.
The key insight? Your actual cash needed at closing might be significantly less than the total closing costs, depending on how you structure the deal. At AmeriSave, we help VA borrowers understand all their options for minimizing out-of-pocket expenses before you even start house hunting.
Not gonna lie, closing costs can feel overwhelming with all the different line items. Let me break down each fee so you know exactly what your paying and why.
This is typically your largest closing cost, and it's unique to VA loans. The VA funding fee is a one-time charge that helps keep the VA loan program running without requiring taxpayer dollars.
It eliminates the need for monthly mortgage insurance, which saves you money over time compared to conventional loans with PMI.
According to the U.S. Department of Veterans Affairs, here are the current funding fee rates effective April 7, 2023.
IRRRL streamline refinance: 0.5%
Here's a practical example: You're buying a $300,000 home with a VA loan for the first time and putting nothing down. Your funding fee is $6,450, which is 2.15% multiplied by $300,000. But if you put down 5%, your loan amount drops to $285,000, and your funding fee drops to $4,275, which is 1.5% multiplied by $285,000. That's a savings of $2,175 just by making a modest down payment.
If you're later awarded VA disability compensation with an effective date before your loan closing, you may be eligible for a funding fee refund. Contact your VA regional loan center at 877-827-3702 to discuss eligibility.
This fee covers your lender's administrative costs for processing and underwriting your loan. The VA caps this at 1% of your loan amount. On a $350,000 loan, you'll pay no more than $3,500 in origination fees.
What's included? Application processing, underwriting, document preparation, and general administrative services. Some lenders charge the full 1%, others charge less. This is one reason shopping multiple VA lenders makes sense-you can compare origination fees alongside interest rates.
A special VA appraisal is needed for every VA purchase loan. The VA appraiser doesn't just find out how much the property is worth; they also make sure it meets the Minimum Property Requirements for safety, soundness, and cleanliness.
The U.S. Department of Veterans Affairs Benefits Administration sets appraisal fees for each area. They change depending on the state, county, type of property, and local market conditions. Some counties that are in high demand have higher fees because there aren't enough appraisers.
Most VA appraisals cost between $400 and $1,200, with most single-family homes costing between $500 and $800. The time it takes to turn around is usually about 10 business days, but it depends on the area.
What is the difference between a home inspection and a VA appraisal? Your lender needs the appraisal, which looks at the property's value and basic habitability. You don't have to get a home inspection, but it's highly recommended. It gives you a much better idea of the property's condition, systems, and possible problems. If you want full protection, set aside money for both.
Lenders pull your credit report from all three major credit bureaus to verify your creditworthiness. This usually costs between $50 and $75. The Consumer Financial Protection Bureau says that credit report fees have gone up a lot in the last few years. Some lenders have said that the cost of tri-merge reports that the VA requires has gone from less than $30 to more than $60.
Title insurance protects both you and your lender against problems with the property's title-things like unknown liens, ownership disputes, or recording errors. The Consumer Financial Protection Bureau notes that title insurance premiums typically range from 0.5% to 1.0% of the purchase price.
On a $300,000 home, expect $1,500-3,000 for title insurance and related title services like the title search and settlement or closing services.
Your local government charges fees to officially record your mortgage and deed. These vary widely by locality, typically ranging from $50 to $250 depending on where you live.
These aren't technically "fees"-they're prepayments for recurring costs. You'll typically prepay:
These amounts vary dramatically based on your location, property taxes, and insurance costs. In Texas, for example, property taxes might run 2-3% of your home's value annually. That same home in another state might have taxes half that amount.
Here's where VA loans really shine. The VA protects you by prohibiting lenders from charging certain fees that conventional borrowers routinely pay.
According to the U.S. Department of Veterans Affairs, these nonallowable fees include:
What does this mean in practice? If your comparing a VA loan to a conventional loan, these prohibited fees can save you $500-1,500 or more. Conventional borrowers might pay $400-600 just for their lender's attorney fees. You don't.
Between you and me, any lender working regularly with VA loans should know these restrictions cold. If a lender tries to charge you any of these fees on a VA loan, that's a red flag. Walk away and find a lender who knows VA rules.
Closing costs get split among three parties: you as the buyer, the seller, and your lender. Understanding who pays what helps you negotiate effectively.
You're typically responsible for:
But here's the key: "responsible for" doesn't mean you have to write a check for all of it. You can negotiate seller concessions, use lender credits, or roll the funding fee into your loan.
Traditionally, sellers pay:
But sellers can also agree to pay many of the buyer's costs through concessions. According to the U.S. Department of Veterans Affairs, sellers can:
What counts as "concessions" versus "normal closing costs"? Normal costs include things like title insurance, escrow fees, and attorney fees. Concessions include paying off the buyer's debts, prepaying hazard insurance, or funding discount points.
Here's a real scenario: Your buying a $350,000 home. The seller agrees to pay $10,000 in closing costs. The first $6,000 covers normal costs like title and escrow. The remaining $4,000 counts toward the 4% concession limit. Since 4% of $350,000 equals $14,000 maximum, the seller still has room for an additional $10,000 in concessions if negotiated.
Your lender covers their own costs, including:
Lenders can also offer lender credits-they give you money toward closing costs in exchange for accepting a slightly higher interest rate. We'll discuss this strategy in the next section.
Okay, real talk for a second-you don't have to just accept whatever closing costs your quoted. Here are seven proven strategies I've used with thousands of borrowers to reduce their out-of-pocket expenses.
This is the tool that works best for you. In a balanced or buyer's market, sellers are often willing to pay a lot of the closing costs to make the deal happen.
How to do it: Include requests for seller concessions in your first offer. Request a certain amount of money or a certain percentage. It's okay to ask for 3–6% in markets that aren't moving as quickly. Even in markets where there is a lot of competition, asking for 1–2% might work.
How you frame it is the key. Your real estate agent can include concessions in the negotiations for the purchase price. Sometimes, paying a little more for something and getting help from the seller costs you less each month than paying less and not getting any help.
Isn't the whole point of a VA loan that you don't have to put down a deposit? Yes, but listen to me.
If you put down only 5%, your funding fee goes from 2.15% to 1.5%. That's a savings of $1,950 on a $300,000 loan. You're paying $15,000 but saving almost $2,000 on the fee. Your loan amount is also lower, which means your monthly payment and total interest paid are both lower.
If you put down 10% or more, the fee drops to 1.25%, which saves you another $750. Do the math for your situation, but sometimes a small down payment pays for itself quickly.
Even within the 1% cap, origination fees can be different. One lender might charge 0.5%, while another might charge the full 1%. That's a $1,500 difference on a $300,000 loan.
Look at least three VA lenders. Consider all the factors, such as the interest rate, the origination fees, and any credits the lender may offer. If the fees are higher, the lowest rate isn't always the best deal.
Our digital platform at AmeriSave makes it easy to see all of your costs up front in a clear, itemized way. There are no surprises or hidden fees. We think that being open and honest builds trust, and veterans deserve nothing less.
With lender credits, you agree to pay a little more in interest, and the lender gives you money to cover closing costs. This lowers the amount of cash you need at closing, but it raises your monthly payment.
When does this make sense? If you plan to refinance in a few years when rates go down, or if you don't have enough money right now but expect to make more money soon. It usually takes 3 to 5 years to break even.
If you agree to a 6.75% rate instead of a 6.5% rate, you will get a $3,000 credit toward your costs. Your monthly payment might go up by $45, but you saved $3,000 up front. You came out ahead if you refinanced in two years.
You can finance the VA funding fee on purchase loans, reducing cash needed at closing to virtually zero potentially. The downside is you'll pay interest on that amount for the life of the loan.
Let's calculate: $6,450 funding fee at 6.5% over 30 years costs you about $14,600 in total including principal and interest. But if that $6,450 cash is needed for emergency funds or home improvements, it might be worth the extra interest.
Your closing costs include prepaid daily interest from your closing date to the end of the month. Close on the 28th instead of the 5th, and you prepay three days of interest instead of 26 days.
On a $300,000 loan at 6.5%, daily interest is about $53. Closing late in the month saves you roughly $1,200 in prepaid interest compared to closing early.
If you have a service-connected disability rating, make sure your Certificate of Eligibility reflects your exemption status before applying. This can save you thousands.
If your awaiting a disability rating decision, consider delaying your loan closing if possible until the decision is made. If you're awarded compensation with an effective date before closing, you're exempt. If the award comes after closing, you might get a refund, but it's easier to avoid the fee upfront.
Check your exemption status by contacting the VA at 877-827-3702 or logging into your eBenefits account.
Understanding when you'll receive information about your closing costs-and when they're due-helps you plan and avoid surprises.
Within three business days of submitting a complete loan application, your lender must provide a Loan Estimate.
Review this carefully. The Loan Estimate isn't final, but it gives you a clear picture of what to expect. Some costs can increase, others are locked.
Your lender orders the VA appraisal early in the process. You'll typically pay this fee upfront, though some lenders roll it into closing costs. The appraisal timeline varies by region-some areas have appraiser shortages causing delays.
If the appraisal comes in low, you have options: ask for a reconsideration of value with additional comparable sales data, negotiate a lower price with the seller, or walk away using the VA Amendment to Contract protection.
At least three business days before closing, you'll receive your Closing Disclosure. This is your final, official cost breakdown. Compare it line-by-line against your Loan Estimate.
Some costs can change, others can't. Origination fees generally cannot increase. Third-party fees you could shop for like title insurance can only increase by 10%. Prepaid costs and government fees can change based on actual costs.
If you spot errors or unexpected increases, speak up immediately. You have three days for a reason-use them to verify everything.
You'll wire or bring a cashier's check for your total cash due at closing. Personal checks aren't usually accepted for large amounts. Your closing agent walks you through each document, explaining as you sign.
Key documents include:
The process typically takes 1-2 hours. After you've signed everything and funds have been disbursed, you get the keys. Congratulations—you're a homeowner.
Let me paint you a picture of how VA loans stack up against conventional and FHA financing when it comes to closing costs.
Upfront costs: VA funding fee of 1.25-3.3%, can be financed Monthly costs: No mortgage insurance Origination: Capped at 1% Down payment: Zero required
The funding fee feels steep upfront, but it's often less than conventional down payment requirements, and you avoid monthly PMI that could run $100-200 or more per month.
Upfront costs: No funding fee Monthly costs: PMI if less than 20% down, typically $100-200 or more monthly Origination: No cap, varies by lender Down payment: Typically 3-20%
A conventional borrower putting 5% down on a $300,000 home pays $15,000 upfront plus PMI of maybe $150 monthly, which equals $1,800 yearly. Over 30 years before reaching 20% equity and dropping PMI, that's potentially $20,000-30,000 in PMI alone-much more than a VA funding fee.
Upfront costs: Upfront MIP of 1.75% of loan amount Monthly costs: Annual MIP of 0.55-1.05% annually, for loan life on many loans Origination: No cap, varies by lender Down payment: Minimum 3.5%
FHA borrowers pay upfront MIP similar to the VA funding fee, but they also pay monthly mortgage insurance that never goes away on most loans. On a $300,000 loan, that's $5,250 upfront plus $150-200 monthly indefinitely. That monthly cost alone exceeds a VA funding fee within just 2-3 years.
According to analysis of Consumer Financial Protection Bureau data on mortgage costs, VA loans offer substantial savings for eligible borrowers despite the funding fee, primarily because:
If you qualify for a VA loan, it's almost always your best option financially, especially if you're exempt from the funding fee or can negotiate seller concessions.
The bottom line? When you know what you're paying and why, VA loan closing costs are easy to handle. The VA funding fee may seem high at first, but VA loans are a great deal for eligible borrowers because they don't require a down payment, don't have monthly mortgage insurance, have capped origination fees, and don't allow junk fees.
And this is where it gets interesting: you have more control over these costs than you might think. If you use strategic negotiation, smart timing, small down payments, and seller concessions, you can save a lot of money. By changing the way we talked about their closing costs, I've helped veterans go from "I can't afford to buy" to "I'm closing next month."
According to data from the Department of Veterans Affairs, the VA loan program is still going strong in 2025, with volume up 45% in the first half of the fiscal year. More veterans are learning about these benefits and using them to buy a home. You've earned this benefit by serving. Make sure you use it wisely.
Are you ready to talk to a lender who puts veterans and honesty first about your VA loan options? AmeriSave's VA loan experts can help you figure out how much your closing costs will be and explain each fee to you. We've helped thousands of military families get VA loans, and we'll make sure you're ready and sure of yourself every step of the way. Let's make your dreams of owning a home come true by starting today.
Depending on your situation, you should plan for 1% to 5% of your loan amount. That would be about $3,000 to $15,000 on a $300,000 loan. The wide range is because of differences in where you live, how much property tax you pay, how much insurance you need, and whether or not you have to pay the funding fee. If you negotiate seller concessions or use lender credits, you might not need as much cash at closing. Getting preapproved with a VA lender is the best way to go because they can give you a personalized estimate based on your needs and the price you want to pay. Before you start looking for a house, AmeriSave gives you detailed cost breakdowns so you know exactly what to expect.
No. You can only add the VA funding fee to your loan amount when you buy a home. You must pay all other closing costs in cash, by cashier's check, or by wire transfer at closing. You do have a few ways to lower your out-of-pocket costs, though. You can negotiate seller concessions to cover closing costs, accept lender credits in exchange for a slightly higher rate, or use both methods together. The rules for refinancing can be a little different, especially for cash-out refinances. The most important thing is to plan ahead. Find out your closing costs early and make your offer or refinance in a way that uses as little cash as possible.
Some closing costs can be deducted from your taxes, but others can't. The IRS says that you might be able to deduct discount points you paid to lower your interest rate and mortgage interest you paid in advance. If you pay the VA funding fee in cash at closing instead of rolling it into your loan, you might be able to deduct it. You can also deduct property taxes that you pay at closing. But a lot of closing costs, like appraisal fees, title insurance, and origination fees, can't be deducted right away. Instead, they might be added to the cost basis of the property, which will change the capital gains when you sell. Tax laws are complicated and change from time to time, so it's best to talk to a qualified tax professional or CPA who can look at your situation and make sure you get the most out of your deductions.
The VA funding fee is a one-time payment that helps the VA home loan program stay open without needing taxpayer money. The U.S. Department of Veterans Affairs says that this fee takes the place of the monthly mortgage insurance that is required on conventional loans with less than 20% down and FHA loans. Depending on how much you put down, whether this is your first VA loan, and the type of loan, the fee can be anywhere from 1.25% to 3.3% of the loan amount. For instance, a first-time VA borrower who puts down nothing pays 2.15%, while someone who puts down 10% pays only 1.25%. The program works because most VA borrowers pay the fee. This money goes toward the guarantee that lets lenders offer VA loans with no down payment and better terms than other types of loans. If a veteran gets disability benefits or meets other criteria for an exemption, they don't have to pay the fee.
You don't have to pay the funding fee if you get VA disability compensation for a service-connected disability, if you are eligible for compensation but get retirement or active-duty pay instead, if you are a surviving spouse receiving Dependency and Indemnity Compensation, if you have a proposed or memorandum rating before closing that shows you are eligible for compensation, or if you got the Purple Heart. Your Certificate of Eligibility from the VA should show whether or not you are exempt. Call the VA at 877-827-3702 to update your records before you apply for your loan if you think you are exempt but it doesn't show on your COE. If you get disability compensation after your closing date, you might be able to get your funding fee back. To learn more about the refund process, call your VA regional loan center. About one-third of VA borrowers can get their funding fees waived, which could save them thousands of dollars.
Yes. The U.S. Department of Veterans Affairs lets sellers pay your closing costs and give you other benefits. Sellers can pay for all of the usual closing costs without any limits. These include things like title insurance, escrow fees, recording fees, and attorney fees. Sellers can offer concessions worth up to 4% of the home's fair market value, as determined by the VA appraisal, in addition to these normal costs. These concessions can pay for things like the VA funding fee, discount points, prepaid insurance, paying off debt, or other things. For instance, the seller could pay $8,000 in normal closing costs and up to $14,000 more in concessions on a $350,000 home. The seller's motivation, the state of the market, and how you structure your offer will all affect how well you can negotiate these concessions. To get the most money from the seller while still making a competitive offer, work with a real estate agent who knows the rules for VA loans.
Your lender needs a VA appraisal, which has two main goals: to find out the property's fair market value and to make sure it meets the VA's Minimum Property Requirements for safety, soundness, and cleanliness. The VA appraiser looks at things like the roof's condition, the heating systems, the safety of the electrical system, and the lack of health risks, but it's not a full evaluation. It's not required to have a home inspection, but it's a good idea because it gives you a much more detailed look at the property's condition, systems, and possible problems. A home inspector looks at everything from the foundation to the roof for 2 to 4 hours. They test the appliances, look for hidden damage, and make a list of repairs or safety issues that need to be fixed. The inspection could find problems that the appraisal didn't. Plan on paying for both: a VA appraisal usually costs $500 to $800 and is often paid for in advance. A home inspection usually costs $300 to $500, depending on where you live and how big your property is. Both keep you safe in different ways and are worth the money.
You will get estimates at different points during the loan process. Your lender has to give you a Loan Estimate with estimated costs within three business days of you applying. This isn't the final number, but it's a good guess. Costs become clearer as your loan goes through underwriting and the appraisal is finished. You'll get your Closing Disclosure at least three business days before closing. This is the last official record of all the costs and cash you'll need. Look it over carefully next to your Loan Estimate. Costs may have gone up a little, but most of them should be close to what was first thought. Call your lender right away if you notice any mistakes or unexpected increases. You have those three days to go over everything, ask questions, and make sure it's all correct. Don't wait until the day of closing to look over your costs. Do it as soon as you get the Closing Disclosure.
You have a lot of good ways to do things. First, be very aggressive when negotiating seller concessions. Ask them to pay for some or all of your closing costs, especially if the market is balanced or favors buyers. Second, think about putting down a small amount, like 5–10%, to lower your funding fee by a lot. Third, compare the origination fees and interest rates of different VA lenders. Even small differences can add up. Fourth, if you need to keep your upfront cash low and can handle a slightly higher rate, use lender credits wisely. Fifth, add your VA funding fee to your loan to lower the amount of cash you need to close. Sixth, close near the end of the month to keep the amount of prepaid daily interest you have to pay to a minimum. Seventh, if you have a service-connected disability rating, check to see if you are exempt from paying the funding fee. Finally, go over your Closing Disclosure very carefully and ask about any fees that seem too high or wrong. Using more than one strategy can save you thousands of dollars in out-of-pocket costs. Find a lender who has worked with VA loans before and can help you figure out the best way to go about it.
You have a few choices if your appraisal is lower than the purchase price. First, ask your lender for a Reconsideration of Value and give them more sales data that shows a higher value. Your real estate agent can help you find recent comps that weren't part of the first appraisal. Second, talk to the seller about lowering the price to match the appraised value. A lot of sellers will negotiate instead of losing the sale. Third, pay the difference in cash. For example, if the home is worth $290,000 but you agreed to pay $300,000, you could bring an extra $10,000 to the closing. Fourth, use the VA Amendment to Contract to get out of the deal. This will protect your earnest money if the appraisal comes in low. This clause is common in VA purchase contracts and lets you back out without any penalties. The VA only lets you borrow up to the appraised value, not the purchase price, to keep you from paying too much. Talk to your agent and lender about which option is best for you.
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