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The Borges Team

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VA Loan Guide

VA Loan Closing Costs: What Do Veterans Actually Pay?

January 2026 8 min read

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).

Want a personalized closing cost estimate? I can run the numbers for your specific situation.

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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%

Funding Fee Exemption

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

1. Down Payment Assistance Programs Best Option

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.

2. Seller Concessions Market Dependent

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.

3. Lender Credits Trade-Off

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.

4. Roll the Funding Fee Into Your Loan Common Choice

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.

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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:

$700,000 Pasadena Home - Zero Out-of-Pocket

Down Payment Required $0 (VA loan)

Estimated Closing Costs $21,000

GSFA Platinum DPA (5%) -$35,000

Cash Needed at Closing $0

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.

For Disabled Veterans

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?

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FAQ

What are typical VA loan closing costs?

VA loan closing costs typically range from 2-5% of the purchase price. On a $700,000 home, that's $14,000-$35,000, with the VA funding fee (2.15% for first use) being the largest single cost.

Can the seller pay VA closing costs?

Yes. Sellers can contribute up to 4% of the purchase price toward veteran closing costs. On a $700K home, that's up to $28,000. This is negotiated as part of your purchase offer.

What is the VA funding fee?

A one-time fee paid to the VA that funds the loan program. It's 2.15% for first-time use with zero down, 3.3% for subsequent use. It can be rolled into your loan. Veterans with 10%+ disability are exempt.

Can I roll closing costs into my VA loan?

You can roll the VA funding fee into your loan. Other closing costs generally cannot be financed but can be covered through seller concessions, lender credits, or down payment assistance programs.

Can I use down payment assistance for closing costs?

Yes. Since VA loans require zero down, DPA funds go entirely toward closing costs. Programs like GSFA Platinum offer up to 5% ($35,000 on a $700K purchase) - often more than enough to cover all costs.

What fees can veterans NOT be charged?

The VA prohibits charging veterans for: lender attorney fees, real estate commissions, prepayment penalties, and more than 1% in origination fees. These protections are unique to VA loans.

Related Guides

→ Can You Combine a VA Loan With Down Payment Assistance? → Do Disabled Veterans Pay the VA Funding Fee? → Why Do Sellers Not Like VA Loans?

JB

Justin Borges

Realtor | Veterans United Partner | DRE# 01940318

Disclaimer: This article provides general information about VA loan closing costs. Actual costs vary by lender, location, and individual circumstances. Closing cost estimates are for illustration only. Consult with a VA-approved lender for accurate figures. The Borges Real Estate Team is not a lender.