The VA loan is famous for zero down payment. But zero down doesn’t mean zero cost at closing. There are still fees involved, and if you don’t understand them going in, you’ll be caught off guard on closing day.
The good news is that VA loan closing costs are typically lower than conventional loan closing costs. The VA actually limits what lenders can charge veterans, which is a protection most buyers don’t get. But you still need to know what to expect so you can budget, negotiate, and avoid overpaying.
Here’s a full breakdown of what veterans actually pay at closing, what’s negotiable, and how to reduce your out-of-pocket costs.
How Much Are VA Loan Closing Costs?
On average, VA loan closing costs run between 2% and 5% of the purchase price. On a $350,000 home, that’s $7,000 to $17,500.
That range is wide because closing costs depend on your location, your lender, your loan amount, and whether you’re paying the VA funding fee out of pocket or rolling it into the loan.
The two biggest line items are the VA funding fee and the lender origination fee. After those, the remaining costs are smaller third-party charges that add up.
The VA Funding Fee
The VA loan funding fee is the single largest closing cost for most veterans. On a first-time VA loan with zero down, the fee is 2.15% of the loan amount. On a subsequent use, it jumps to 3.3%.
On a $350,000 loan, that’s $7,525 for first-time use or $11,550 on subsequent use.
Most veterans roll the funding fee into the loan balance instead of paying it at closing. This means it doesn’t cost you cash on closing day, but it does increase your loan amount and your monthly payment slightly.
If you have a service-connected disability rating of any percentage, the funding fee is waived completely. This is one of the biggest financial benefits of filing your VA disability claim before buying a home.
Lender Origination Fee
The VA caps the lender origination fee at 1% of the loan amount. This fee covers the lender’s processing, underwriting, and administrative costs.
On a $350,000 loan, the maximum origination fee is $3,500.
Not all lenders charge the full 1%. Some charge less, and some roll the origination fee into a slightly higher interest rate. When you compare VA loan lenders, look at the origination fee alongside the interest rate. A lender with a lower rate but a full 1% origination fee might cost you more overall than a lender with a slightly higher rate and no origination fee.
This is why getting quotes from multiple lenders matters. Get pre-approved with a VA-specialized lender and compare at least three Loan Estimates side by side before committing.
Third-Party Closing Costs
Beyond the funding fee and origination fee, there are several smaller costs charged by third parties involved in the transaction.
Appraisal fee. The VA requires an appraisal on every purchase to confirm the home meets minimum property requirements and is worth the purchase price. VA appraisals typically cost $400 to $800 depending on your location and property type.
Title insurance. This protects the lender (and optionally you) against claims on the property’s title. Title insurance runs $500 to $1,500 depending on the purchase price and your state.
Title search and settlement fees. The title company charges for searching public records and handling the closing. Expect $300 to $600.
Credit report fee. The lender pulls your credit report during the application process. This usually costs $30 to $75.
Recording fees. Your county charges a fee to record the deed and mortgage documents. Typically $50 to $250.
Survey fee. Some states or lenders require a property survey. If needed, this runs $300 to $500.
Prepaid items. At closing, you’ll prepay certain costs including homeowner’s insurance (first year’s premium), property taxes (prorated from closing date), and prepaid interest (daily interest from closing date to end of month).
What the VA Does NOT Allow Lenders to Charge
The VA protects veterans by prohibiting certain fees that conventional lenders commonly charge. These are sometimes called “non-allowable fees.”
Veterans cannot be charged for attorney fees chosen by the lender, brokerage fees, prepayment penalties, or real estate agent commissions. The VA also prohibits lenders from charging processing fees, application fees, or document preparation fees on top of the 1% origination fee.
If you see any of these on your Loan Estimate, push back. They’re not allowed on VA loans.
Can the Seller Pay Your Closing Costs?
Yes. On a VA loan, the seller can pay up to 4% of the purchase price toward the buyer’s closing costs and concessions. This is called a seller concession.
On a $350,000 home, that’s up to $14,000 the seller can contribute toward your closing costs. In a buyer’s market or with a motivated seller, this can cover most or all of your out-of-pocket costs.
Seller concessions are negotiated as part of your purchase offer. Your real estate agent should know how to structure this. In competitive markets, asking for concessions can make your offer less attractive. In slower markets, it’s common and expected.
Combined with zero down payment, seller-paid closing costs can mean you buy a home with almost nothing out of pocket. That’s a powerful advantage for veterans looking to house hack or start building a real estate portfolio with the BRRRR strategy.
A Real Closing Cost Example
Here’s what closing costs might look like on a $350,000 VA loan purchase with first-time use and zero down.
VA funding fee (2.15%, rolled into loan): $7,525 (not out of pocket)
Costs paid at closing: Origination fee (1%): $3,500 Appraisal: $550 Title insurance: $900 Title search/settlement: $450 Credit report: $50 Recording fees: $150 Prepaid homeowner’s insurance: $1,200 Prepaid property taxes (3 months): $700 Prepaid interest (15 days): $900
Total due at closing: approximately $8,400
If the seller agrees to a 2.4% concession ($8,400), your out-of-pocket cost drops to zero. If the seller covers half, you’re looking at roughly $4,200 out of pocket.
Before you start shopping, check your eligibility and get pre-qualified with a VA lender so you know exactly what to expect for your specific situation.
How to Reduce Your Closing Costs
Negotiate seller concessions. Ask the seller to cover your closing costs as part of the offer. This is the most effective way to reduce out-of-pocket expenses.
Shop multiple lenders. Origination fees, rates, and lender credits vary significantly. Getting quotes from at least three VA lenders within a 14-day window can save you thousands.
Ask about lender credits. Some lenders offer credits toward closing costs in exchange for a slightly higher rate. If the rate is still competitive, this trade-off can make sense.
File your VA disability claim. If you have any service-connected condition, a disability rating waives the funding fee entirely. That’s $7,525 saved on a $350,000 loan. Don’t close without exploring this first.
Improve your credit score. A higher credit score means a lower interest rate, which reduces your prepaid interest at closing and saves you money every month going forward. Check your score for free with Credit Karma before you start the process.
Roll the funding fee into the loan. If cash is tight, rolling the funding fee into your loan balance keeps your closing costs lower. You’ll pay interest on it over time, but it preserves your cash for reserves, repairs, or investing.
The Bottom Line
VA loan closing costs are real, but they’re lower than what most conventional buyers pay. Between the funding fee exemption for disabled veterans, seller concessions up to 4%, and VA restrictions on what lenders can charge, the system is designed to keep costs manageable.
Know what to expect before you start house hunting. Get quotes from multiple lenders, negotiate seller concessions, and make sure you’re not overpaying on fees.
Ready to take the first step? See what VA loan options you qualify for with zero down.
For a complete overview of how the VA loan stacks up against conventional financing, read our guide on VA Loan vs Conventional Loan: Which Is Better for Veterans?