Understanding VA Loan Closing Costs and Fees

The VA home loan, a benefit available to U.S. military veterans, is renowned for its zero-down payment facility, making homeownership more accessible for those who’ve served. But while the no-down-payment feature is highly appealing, veterans should also be aware of the VA loan closing costs and fees. Knowing what to expect can ensure that there are no surprises during the home-buying process.

VA Loan Closing Costs and Fees

VA Funding Fee

This fee is unique to VA loans and goes directly to the Department of Veterans Affairs. Its purpose is to offset the costs of the VA loan program. The amount varies based on the loan’s size, type, and the veteran’s service history. Some veterans, including those receiving VA disability compensation and Purple Heart recipients, may be exempt from this fee.

Loan Origination Fee

Lenders may charge this fee for processing, underwriting, and originating the loan. Under VA guidelines, this fee is capped at 1% of the loan amount. Six Pillar Lending NEVER charges origination fees!

Discount Points

Discount points are optional fees that buyers can pay to reduce their mortgage rate. One point typically equals 1% of the loan amount. Sometimes discount points are required to lower the loan’s interest rate, which lowers the monthly payment and reduces a borrower’s debt-to-income (DTI) ratio. But understand that these are not discounts… a borrower is paying interest up-front to get a lower interest rate.

Appraisal Fee

The VA requires an appraisal to determine the home’s market value and ensure it meets safety and habitability standards. This fee varies based on location and property type.

Title Insurance and Title Search

Title insurance protects the lender and homeowner from future property ownership disputes. A title search examines property records to ensure no liens or issues could affect ownership.

Recording Fees

Local municipalities charge these fees to record the mortgage and deed at the local registrar.

Survey Fee

Some lenders might require a survey to determine the property’s exact boundaries. This fee is more common in certain states and for specific property types.

Miscellaneous Fees

Other fees can include credit report charges, flood certification, prepaid property taxes, homeowner’s insurance, and more.

VA Loan Closing Costs and Fees

While VA home loans offer numerous advantages, including zero down payment, understanding the closing costs and fees is crucial for a smooth home-buying journey. And this is where Six Pillar Lending comes into play.

Six Pillar Lending, a Veteran-Owned Mortgage Brokerage, is not just another name in the lending industry. We’re veterans serving veterans. We understand the unique needs and challenges faced by our fellow service members. Our dedication is to help you navigate the VA home loan process, ensuring you receive lower rates and minimal fees. Why? Because we believe in giving back to those who’ve given so much for our country. Trust in our experience and commitment and let us make your home ownership dream a more affordable reality. Contact us when you’re ready to get started,