Yes, the buyer/veteran is allowed to pay the owner's title policy.
With today's ultra low rates, one way we are helping VA buyers get their offer accepted in this day of low inventory and sellers wanting to see offers of cash or Conventional financing with large down payments is to offer the buyer a slightly higher interest rate, say 0.125% or 0.25%, and give them the credit towards closing costs (non-allowables and possibly more than just those). For as long as I can remember it has been customary in our market for the seller to pay the VA non-allowables on VA offers but in today's ultra-competitive market that makes it very difficult to get a VA offer accepted. This way the offer is stronger from the seller's perspective and it doesn't cost the buyer much on their monthly payment at all.
Just a little correction to John Burke's statement: "The following list provides examples of items that cannot be charged to the veteran as â€œitemized fees and charges.â€ Instead, the lender must cover any cost of these items out of its flat fee:"
This is not entirely accurate. It is true that the veteran cannot pay these fees but it is not a requirement that the lender pays it. Another party, such as the seller, agents, lender, etc, can pay the VA non-allowable fees. It is not a requirement that the lender pays them...