VA Loan Closing Costs: What Veterans Pay and What Sellers Can Cover

What Closing Costs Do Veterans Pay on a VA Loan?

While VA loans eliminate the down payment and PMI, they do carry closing costs. Here are the fees veterans are allowed to pay:

• VA funding fee — 2.15% for first-time use with $0 down (can be rolled into the loan)
• Loan origination fee — capped at 1% of the loan amount by the VA
• Appraisal fee — typically $400 to $600 in the Tampa Bay area
• Credit report fee — usually $30 to $60
• Title insurance — varies by purchase price; Florida uses a promulgated rate schedule
• Recording fees — county fees for recording the deed and mortgage
• Survey fee — if required, typically $200 to $400
• Prepaid items — property taxes, homeowners insurance, and per-diem interest from closing to the first payment
• Flood certification fee — typically $15 to $25

What Are Non-Allowable Fees on VA Loans?

The VA specifically prohibits veterans from paying certain fees. These "non-allowable" costs must be covered by the seller, the lender, or another party:

• Lender's attorney fees — the veteran cannot be charged for the lender's legal costs
• Real estate commissions — always paid by the seller (standard in all transactions)
• HUD/VA compliance inspection fees — if required
• Settlement or escrow fees above normal — fees that exceed reasonable and customary charges
• Notary fees in some cases — depends on state regulations

The non-allowable fee rule is one reason some sellers have historically been reluctant to accept VA offers — they worry about absorbing extra costs. However, in practice, many of these fees are small or already covered in normal transactions. Our VA loan myths page addresses this misconception in detail.

How Much Can Sellers Contribute to VA Closing Costs?

On a VA loan, sellers can contribute up to 4% of the purchase price in concessions. This 4% can cover:

• Buyer's closing costs (origination, title, recording, etc.)
• The VA funding fee
• Prepaid taxes and insurance
• Payoff of buyer's debts (credit cards, car loans, etc.)
• Discount points to buy down the interest rate

On a $350,000 home, 4% equals $14,000 in potential seller concessions. In markets where sellers are motivated, this can result in a veteran buying a home with virtually no cash out of pocket.

How Does the VA Funding Fee Work?

The VA funding fee is a one-time charge that goes directly to the VA to help sustain the loan guaranty program. It is not a lender fee — it funds the VA's ability to offer $0 down loans without requiring PMI.

The fee amount depends on three factors: whether this is your first or subsequent use of the VA benefit, your down payment amount, and whether you are active-duty, Reserve, or National Guard. For a first-time VA buyer putting $0 down, the fee is 2.15%. Putting 5% or more down reduces it to 1.5%, and 10% or more down reduces it further to 1.25%.

Funding fee exemptions: Veterans receiving VA disability compensation, Purple Heart recipients serving on active duty, and surviving spouses receiving Dependency and Indemnity Compensation (DIC) are exempt. Learn more about disability exemptions on our disabled veteran home buying page.

What Are the Average VA Loan Closing Costs?

In my experience helping Tampa Bay veterans close on homes, VA loan closing costs typically range from 2% to 5% of the loan amount — not including the VA funding fee. On a $350,000 home (close to the Hillsborough County median in 2026), that translates to roughly $7,000 to $15,000 in total closing costs.

Here is how those costs typically break down on a $350,000 purchase in Tampa Bay:

• Loan origination fee (1% max): $3,500
• VA appraisal: $500–$800
• Credit report: $30–$60
• Title insurance (owner's + lender's): $1,800–$2,500
• Title search and exam: $200–$400
• Recording fees: $75–$150
• Survey: $200–$400
• Flood certification: $15–$25
• Prepaid property taxes (6 months): $2,500–$3,500
• Prepaid homeowners insurance (14 months): $2,000–$4,000
• Per-diem interest: varies by closing date

Add the VA funding fee (2.15% = $7,525 on a $350K loan for first-time use) and your total cash-to-close could reach $15,000–$22,000 — unless you use strategies like seller concessions or lender credits, which I walk my clients through on every VA transaction.

According to the Consumer Financial Protection Bureau (CFPB), borrowers should receive a Loan Estimate within three business days of applying and a Closing Disclosure at least three days before closing — giving you time to verify every line item.

VA loan closing costs include lender fees, title charges, government recording fees, and prepaid escrow items.

VA Loan Closing Costs for Buyers vs Sellers — Who Pays What?

One of the most common questions I get from veterans: "What do I actually pay versus what the seller pays?" Here is the breakdown:

What the Buyer (Veteran) Pays

• VA funding fee — 2.15% first use, $0 down (can be rolled into loan)
• Loan origination fee — capped at 1% of the loan amount by VA regulations
• Discount points — optional; each point costs 1% of the loan and reduces the rate by ~0.25%
• VA appraisal — $400–$800 depending on property complexity
• Credit report fee — $30–$60
• Title insurance (lender's policy) — required by the lender
• Recording fees — county charges for recording the deed and mortgage
• Prepaid property taxes and insurance — funds your escrow account
• Per-diem interest — daily interest from closing day to end of month

What the Seller Typically Pays

• Real estate agent commissions — negotiated between seller and their agent
• Owner's title insurance policy — in Florida, the seller customarily pays this
• Documentary stamps on the deed — $0.70 per $100 of sale price in Florida
• Any VA non-allowable fees — costs the VA prohibits the veteran from paying
• Seller concessions (up to 4%) — negotiable; can cover buyer's closing costs

In my Tampa Bay transactions, I help veterans negotiate seller concessions in the purchase contract. On a $350,000 home, the seller can contribute up to $14,000toward the buyer's costs — often enough to cover every closing cost the veteran would otherwise pay out of pocket.

What Are VA Non-Allowable Fees?

The VA protects veterans by prohibiting them from paying certain closing costs that other loan types would pass to the borrower. These are called "non-allowable fees" — and someone else (seller, lender, or real estate agent) must cover them if they arise.

According to VA.gov's official closing cost guidance, veterans cannot be charged for:

• Attorney fees — the lender's attorney costs cannot be passed to the veteran
• Real estate agent commissions — always a seller expense
• Brokerage fees or commissions — cannot be charged to the buyer on a VA loan
• Prepayment penalties — VA loans never carry prepayment penalties
• HUD/VA compliance inspection fees — when required by the lender
• Excessive settlement charges — fees above what is reasonable and customary for the area
• Certain document preparation fees — fees for loan-related documents prepared by the lender
• Notary fees — in certain circumstances

In practice, these non-allowable fee protections mean sellers in a VA transaction may pay slightly more than in a conventional deal. However, in my experience, the actual dollar amount is usually small ($300–$800 total), and I educate listing agents on this so it does not become a negotiation barrier. Our VA loan myths page addresses why non-allowable fees should not scare sellers away from VA offers.

Can Closing Costs Be Rolled Into a VA Loan?

This is one of the top questions I hear from veterans buying their first home: "Can I just add the closing costs to my loan balance?" The short answer: only the VA funding fee can be rolled into the loan. Standard closing costs (title, appraisal, recording fees, prepaids) cannot be financed into the mortgage balance.

However, there are several legitimate ways to avoid paying closing costs out of pocket:

1. Roll the VA funding fee into the loan — On a $350,000 loan, this moves $7,525 from your cash-to-close into your monthly payment (adds roughly $45/month at 6.5%).
2. Negotiate seller concessions — Sellers can pay up to 4% of the purchase price ($14,000 on a $350K home) toward your closing costs, prepaids, and even the funding fee.
3. Request lender credits — Accept a slightly higher interest rate (typically 0.125%–0.50% higher) in exchange for the lender covering $2,000–$8,000+ in closing costs.
4. Use gift funds — VA loans allow gift funds from family, friends, or charitable organizations to cover closing costs. No repayment required. The donor provides a gift letter confirming the funds are not a loan.
5. Employer relocation assistance — Many military relocations include PCS move benefits or employer-paid closing cost assistance.

I help my clients stack these strategies. In a typical Tampa Bay VA purchase, we combine seller concessions with a rolled-in funding fee — resulting in a veteran bringing $0 to $2,000 to the closing table rather than $15,000+.

With the right negotiation strategy, many Tampa Bay veterans bring minimal cash to the closing table on a VA loan.

VA Loan Closing Costs for Disabled Veterans

If you have a service-connected disability rating from the VA, you receive a significant financial benefit: complete exemption from the VA funding fee. This is one of the biggest cost savings in the VA loan program.

Here is what the funding fee exemption saves on common loan amounts:

Who qualifies for the funding fee exemption? According to VA Pamphlet 26-7:

• Veterans receiving any VA disability compensation (even 10%)
• Veterans rated eligible for compensation but receiving retirement or active-duty pay instead
• Active-duty Purple Heart recipients
• Surviving spouses receiving Dependency and Indemnity Compensation (DIC)

Important: If you have a pending disability claim when you close, you initially pay the funding fee. Once the VA approves your claim, you can apply for a retroactive refund of the funding fee — I have helped clients recover $5,000–$10,000+ this way. Visit our disabled veteran home buying guide for the full process.

Even with the funding fee waived, disabled veterans still pay standard closing costs (title insurance, appraisal, recording fees, prepaids). But combined with $0 down and no PMI, the total cash needed at closing is substantially lower than any other loan type.

No Closing Cost VA Loan — Is It Real?

Yes — a "no closing cost VA loan" is real, but it is not free. Here is how it works: the lender covers your closing costs in exchange for charging a slightly higher interest rate. This is called a "lender credit" structure.

For example, on a $350,000 VA loan in today's market:

• Standard rate: 6.25% with $8,000 in closing costs you pay
• No-closing-cost rate: 6.75% with $0 in closing costs (lender covers them)

The difference in monthly payment? About $115/month more on the higher rate. Over 30 years, you would pay roughly $41,000 more in interest. But most VA borrowers do not keep their loan 30 years — the average VA loan is refinanced or paid off within 7–10 years.

When a No-Closing-Cost VA Loan Makes Sense

• You are PCS-ing and expect to sell or refinance within 3–5 years
• You want to preserve cash reserves for moving expenses or home improvements
• Rates are expected to drop, and you plan to do a VA IRRRL refinance when they do
• You are combining with your funding fee exemption (disabled vet) for true $0-out-of-pocket

When It Does NOT Make Sense

• You plan to stay in the home 10+ years without refinancing
• You have cash available and want the lowest possible long-term cost
• The rate difference is more than 0.50% — some lenders overcharge for this

I always run both scenarios for my clients — showing the total cost over their expected ownership period — so they can make a data-driven decision rather than guessing.

VA Loan Closing Costs vs FHA vs Conventional: Full Comparison

How do VA loan fees stack up against other mortgage types? This comparison table shows the key cost differences for a $350,000 home purchase in Florida:

The VA loan's $0 down payment combined with the ability to roll the funding fee into the loan and negotiate seller concessions makes it the lowest cash-to-close option for eligible veterans — even though closing costs themselves are comparable to other loan types.

For a deeper dive into eligibility, visit VA.gov's loan eligibility page or check your Certificate of Eligibility (COE) through the VA eBenefits portal.

What Are Lender Credits and How Can They Reduce Costs?

Lender credits are another way to reduce your out-of-pocket closing costs. A lender may offer to cover a portion of your closing costs in exchange for a slightly higher interest rate. This trade-off can make sense if you want to minimize cash at closing and plan to refinance later.

For example, a lender might offer a 0.25% higher rate in exchange for $3,000 in lender credits toward your closing costs. Whether this is a good deal depends on how long you plan to keep the loan — the longer you keep it, the more that higher rate costs you over time. If you plan to refinance within a few years, lender credits can be a smart play.

What Is the Difference Between Closing Costs and Prepaids?

Closing costs are fees for services related to creating the loan — origination, appraisal, title work, recording. Prepaids are advance payments for recurring costs you would pay anyway — property taxes, homeowners insurance premiums, and HOA dues.

Both show up on your Closing Disclosure (the document you receive at least three business days before closing), but they serve different purposes. Closing costs are one-time charges; prepaids are just paying future bills early to fund your escrow account.

In Florida, property taxes are relatively high compared to some states, so the prepaid portion of your closing statement can be significant. Your lender will typically collect several months of property tax and insurance reserves at closing.

How Can Veterans Minimize Out-of-Pocket Closing Costs?

Here are proven strategies Tampa Bay veterans use to reduce what they bring to closing:

1. Negotiate seller concessions — ask for 2-4% seller concessions in your offer. In balanced or buyer-friendly markets, sellers routinely agree.
2. Request lender credits — trade a slightly higher rate for credits that offset closing costs.
3. Roll the funding fee — the VA funding fee can be added to your loan balance so you do not pay it out of pocket.
4. Shop multiple lenders — origination fees, rates, and lender credits vary. Getting three Loan Estimates lets you compare apples to apples.
5. Apply for disability exemption — if you have a pending VA disability claim, you may be exempt from the funding fee retroactively.
6. Close late in the month — per-diem interest charges are lower when you close near the end of the month, reducing your prepaid interest amount.

Want to see how closing costs and the funding fee affect your monthly payment? Use our VA mortgage calculator to estimate your full monthly payment, or check your exact funding fee with the VA funding fee calculator.

I'm Barrett Henry — a Military Relocation Professional (MRP) and Broker Associate with REMAX Collective. As the son of a U.S. Air Force veteran with 23+ years of real estate experience, I understand exactly which fees apply to VA transactions and how to structure offers that minimize your out-of-pocket costs. For official closing cost guidelines, visit the U.S. Department of Veterans Affairs.