The Borges Team
PasadenaVA Loan Closing Costs: What Do Veterans Actually Pay?
VA loan closing costs typically run 2-5% of the purchase price. On a $700,000 home, expect $14,000-$35,000 in total closing costs. The largest cost is usually the VA funding fee (2.15% for first-time use). Veterans can reduce or eliminate out-of-pocket costs through seller concessions, lender credits, and down payment assistance programs.
Breaking Down VA Closing Costs
Here's what makes up your closing costs on a typical Greater LA purchase:
| Cost | Typical Amount | On $700K Home |
|---|---|---|
| VA Funding Fee (first use) | 2.15% | $15,050 |
| Lender Origination Fee | 0-1% | $0-$7,000 |
| Title Insurance | 0.5-1% | $3,500-$7,000 |
| Escrow Fee | $1,500-$2,500 | $2,000 |
| Appraisal | $600-$1,000 | $800 |
| Credit Report | $50-$100 | $75 |
| Recording Fees | $100-$300 | $200 |
| Prepaid Property Taxes | 2-6 months | $3,500-$5,000 |
| Prepaid Homeowners Insurance | 12 months | $1,500-$3,000 |
| Total Range | $21,000-$35,000 |
The range is wide because some costs are negotiable, some depend on your lender, and some vary based on when you close (affecting prepaid taxes).
The VA Funding Fee Explained
The VA funding fee is the single largest closing cost for most veterans. It's a one-time fee paid to the VA that helps fund the loan program.
| Loan Type | First Use | Subsequent Use |
|---|---|---|
| Purchase (0% down) | 2.15% | 3.3% |
| Purchase (5%+ down) | 1.5% | 1.5% |
| Purchase (10%+ down) | 1.25% | 1.25% |
| Cash-Out Refinance | 2.15% | 3.3% |
| IRRRL (Streamline Refi) | 0.5% | |
Veterans with a VA disability rating of 10% or higher are completely exempt from the funding fee. On a $700K purchase, that's a $15,050 savings. Surviving spouses of veterans who died in service are also exempt.
Fees Veterans Cannot Be Charged
The VA protects veterans from certain fees. Your lender cannot charge you:
- Attorney fees charged by the lender (your own attorney is fine)
- Real estate broker commissions
- Prepayment penalties
- HUD/FHA inspection fees
- More than 1% origination fee (discount points are separate and allowed)
These protections are part of what makes VA loans veteran-friendly beyond just the zero down payment.
4 Ways to Reduce or Eliminate Closing Costs
Since VA loans require zero down payment, DPA funds can go entirely toward closing costs. Programs like GSFA Platinum offer up to 5% of the loan amount as a silent second (no monthly payments, repaid only when you sell).
On a $700K purchase: Up to $35,000 in assistance - more than enough to cover all closing costs.
Sellers can contribute up to 4% of the purchase price toward your closing costs. On a $700K home, that's up to $28,000. This is negotiated as part of your offer.
Reality check: In competitive markets, sellers may not agree to concessions. In balanced or buyer-friendly markets, this is a strong option.
Your lender can provide credits toward closing costs in exchange for a slightly higher interest rate. This reduces upfront costs but increases your monthly payment.
Best for: Buyers who plan to refinance in a few years or who prioritize cash preservation today.
The VA funding fee can be added to your loan amount instead of paid at closing. This doesn't eliminate the cost - you'll pay interest on it over time - but it reduces what you need at closing.
Example: $700K purchase becomes a $715,050 loan with the fee rolled in.
Let's Stack Your Benefits
I specialize in combining VA loans with DPA programs to minimize - or eliminate - out-of-pocket costs.
Free consultation - No pressure
Real Example: $0 Out-of-Pocket Closing
Here's how a veteran buying a $700,000 home in Pasadena can close with zero cash out of pocket:
The $14,000 surplus from DPA can be applied to prepaid items or held for reserves. Some programs allow it to cover the VA funding fee as well.
With the funding fee waived and DPA covering remaining costs, disabled veterans often close with money back - funds that can go toward moving expenses, furniture, or reserves.
What You'll See on the Loan Estimate
Your lender must provide a Loan Estimate within 3 business days of your application. Key sections to review:
- Page 1: Loan amount, interest rate, monthly payment, and estimated cash to close
- Page 2: Itemized closing costs broken into loan costs and other costs
- Page 3: Cash to close calculation and comparison to other loans
Compare Loan Estimates from multiple lenders. The fees can vary significantly, especially origination fees and title services.
Ready to See Your Real Numbers?
I'll connect you with VA lenders who close in 15 days and help you access every available assistance program.
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