Property Q&A in Encanto>Question Details

June, Both Buyer and Seller in Phoenix, AZ

VA loan fees - On a VA loan, what additional fees is the seller required to pay (over those required on a conventional loan)?

Asked by June, Phoenix, AZ Mon Jan 28, 2013

I understand that on VA loans the buyer is not allowed to pay for certain things, and the seller need to pay for those. What additional charges should a seller expect to pay if an offer with a VA loan is accepted?

Help the community by answering this question:


> VA Funding Fee:

* Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan's cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time.

> You do not have to pay the fee if you are a:

* Veteran receiving VA compensation for a service-connected disability, OR
* Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
* Surviving spouse of a Veteran who died in service or from a service-connected disability

> Other Loan Costs

* Be aware that the lender charges interest, in addition to closing fees and charges. Here are some general rules:
* The lender, not VA, sets the interest rate, discount points, and closing costs. These rates may vary from lender to lender
* Closing costs such as the VA appraisal, credit report, state and local taxes, and recording fees may be paid by the purchaser, the seller, or shared
* The seller can pay for some closing costs. (Under our rules, a seller's "concessions" can't exceed 4% of the loan. But only some types of costs fall under this 4% rule. Examples are: payment of pre-paid closing costs, VA funding fee, payoff of credit balances or judgments for the Veteran, and funds for temporary "buydowns." Payment of discount points is not subject to the 4% limit.)
* You are not allowed to pay for the termite report, unless the loan is a refinance. That fee is usually paid by the seller.

Reference Link:
2 votes Thank Flag Link Tue May 12, 2015
VA Loan Costs -- Although lenders must agree to keep fees low in order to enjoy this type of backing for their loan programs, VA loan costs do exist. Some of the most common charges a veteran might encounter when obtaining this type of loan include:
Appraisal fees
Credit report fee
Loan origination fee
Discount points
Title search and insurance fees
Recording fees and taxes
Survey fees

These loans are written to stop VA loan costs from including some extras that other buyers might encounter. For example, no brokerage fees or commission can be charged to a qualified veteran.

Discover the benefits of a VA loan including VA mortgage rate information here -
2 votes Thank Flag Link Wed Apr 29, 2015
I'm purchasing a house using a VA loan. While reviewing my Closing Disclosure I noticed that I was being charged a considerable amount of fees. I was under the impression that the borrower was not suppose to be charged curtain fees when using a VA loan. Here is a list of what I'm being charged:
1) Recording Fees - $116
2) E-Doc Fee - $150
3) Settlement Fee - $259
This is just a few. Am I wrong, or am I getting charged for fees I shouldn't be?
0 votes Thank Flag Link Wed Mar 9, 2016
Hi June,

There are some good answers here that cover the fees a VA buyer can not pay.

However, that does not mean the seller has to pay them. In some cases, I have seen the lender cover some or most of these fees. If the lender is paying the fees, the lender may work them into the loan costs with a slightly higher interest rate.

Not likely or common, but some of the fees could be paid by the real estate agents.

With the current market conditions, sellers are less willing to pay buyer costs. VA buyers, should have a discussion with their lender to see what will or can be covered. This will help you negotiating a purchase if you don't need to ask for all the costs. Sellers should discuss the options with their agent and possibly the buyers lender before accepting or countering any VA offer.

0 votes Thank Flag Link Tue Jan 29, 2013
Hi June,

I idea is to help those that have served our country when they purchase a home, so many of the closing fees are put under the seller to reduce the burden of home purchase for veterans. When you are selling your home and considering a VA offer, your agent should provide you with a closing cost estimate worksheet based on input from the buyer's lender and the title company. They can walk you through the different fees and why you are paying for them.
0 votes Thank Flag Link Mon Jan 28, 2013
This is a great question for a lender. My clients have worked with several great lenders in the past and I can send you over some names and phone numbers if that will help you. What part of Phoenix are searching for a home in?
0 votes Thank Flag Link Mon Jan 28, 2013

I have helped a few buyers purchase properties using VA loans. In my experience the biggest differences are:

1 - escrow fee - seller pays 100%
2 - HOA transfer fee - seller pays 100%
3 - termite inspection - seller pays 100%

VA used to require sellers to pay discount points on behalf of the buyer. This has changed and now it is typically paid by the buyers. However it can still be negotiated between buyers and sellers.

I hope this helps.

Jose Dias, REALTOR
(623) 418-5700
0 votes Thank Flag Link Mon Jan 28, 2013
Thank you all for your answers.
0 votes Thank Flag Link Mon Jan 28, 2013
Hello June,

I've found this document which indicates who customarily pays for what cost to be helpful:

It includes information for FHA/VA/Conventional/Cash.
0 votes Thank Flag Link Mon Jan 28, 2013
These are some of the fees that cannot be paid by the VA borrower but you should contact a loan officer/lender to verify nothing has changed

Tax Service Fee
Endowment Fee - Lennar
Application Fee
Doc Prep Fee
Underwriting Fee
Processing Fee
Courier Fee
Termite Work
Escrow/Closing/Settlement Fee
Express Mail/Shipping/Handling F
Email/Edoc Fee
Admin Fee
Wire Fee
Am Schedule Fee
Notary Fee
Copy Fee
Loan Tie in Fee
Sub Escrow Fee
Verification Fees
0 votes Thank Flag Link Mon Jan 28, 2013
I can get you in touch with a lender that can answer that question for you. Just contact me and I will provide and name and email address so you will know what to expect.
0 votes Thank Flag Link Mon Jan 28, 2013
June, That is a lender question.

If you would like, please contact me and I'll put you in touch with a licensed lender that can answer loan related questions with answers.

Rules and regulations are constantly changing so I would not want to respond with something that I believe to be true and has changed recently.

Debbie Nieman
Keller Williams Sonoran Living
0 votes Thank Flag Link Mon Jan 28, 2013
I do not know if that will make a difference, but the property being sold is located in Arizona.
0 votes Thank Flag Link Mon Jan 28, 2013
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