What are VA loan closing costs?

Learn how much you might pay for closing costs on a VA loan

VA loans help veterans buy and refinance their homes with competitive interest rates, flexible credit terms, no down payments, and easier refinancing with the Interest Rate Reduction Refinancing Loan (IRRRL) program. Like other mortgages, VA loans come with closing costs you will need to pay or roll into the loan amount of your home loan. Read on to learn more.

Estimating average VA closing costs

The closing costs of VA loans average between 2% and 5% of a home’s purchase price according to US News and World Report. These closing costs can include:

• Lender fees. Lender fees are also called origination fees and their costs can vary from lender to lender.
• Discount points. Some VA loans might require you to pay “points” to get a lower interest rate. One point is equal to 1% of the loan amount. If your VA loan has points, you will have to pay these at closing.
• VA Funding Fee. Most veterans and service members will have to pay a one-time VA funding fee when they get a VA loan. When you are buying a house, this funding fee currently ranges between 1.4% and 3.6% of the mortgage amount. The funding fee is 0.5% for streamline refinances. You can pay the fee at closing or you can include it in your loan.
• Other closing costs. These costs can include fees for credit reports, home appraisals, title insurance, and government recording.
• Homeowners insurance and real estate taxes. When you close on a mortgage, the lender will require you to pay homeowners insurance and property taxes.

When you are considering different VA loan offers, compare the annual percentage rate (APR) as well as the interest rate. APR includes many of the closing costs listed above and gives you a better sense of the total cost of a VA loan.

VA closing costs for buyers and sellers

The VA requires sellers to pay real estate professional commissions, brokerage fees, and buyer broker fees. They also allow the Veteran to pay for the termite inspection in the event the termite inspection is required by the Notice of Value ("NOV"). Buyers and sellers can negotiate who will pay other VA loan closing costs, including the funding fee. Visit the Department of Veterans Affairs website to learn more.

How do VA home loan closing costs compare?

You can generally expect to pay between 2% and 5% of a house’s purchase price in closing fees for VA loans as well as other types of mortgages according to Forbes. Different loans may have different closing costs, too. For example, conventional mortgages do not have a funding fee like VA loans. However, VA loans have benefits compared to conventional loans you’ll want to consider when you choose a mortgage.

VA IRRRL closing costs

When you have a VA loan, you can often refinance it with a VA IRRRL which is also known as a "streamline refinance." This type of refinance lets you lower your rate with less paperwork and a faster closing compared to other mortgages. IRRRLs have closing costs you may have to pay. However, the VA funding fee is significantly lower for refinancing compared to the fee when you buy a home. You currently are required to pay 0.5% of the loan amount with an IRRRL refinance. Many of these closing costs can be rolled into your loan amount, too.

Freedom Mortgage is a top VA lender in the United States according to Inside Mortgage Finance, 2023.

Last reviewed and updated June 2023 by Freedom Mortgage.