Closing Costs VA Loan Borrowers Must Know About

Closing costs are one of the major costs associated with taking a VA home loan in Texas or any other state in the U.S. Typically, the VA loan closing costs vary in the range of 1-3 percent of the loan amount. The actual amount depends on many factors such as the property’s value, lender fees, and HOA fees. To lessen the burden of home loan borrowers, VA allows sellers to pay a part of the closing costs. If you too are looking for a Texas VA home loan, it is important for you to know about these costs. Here’s a list of some of the most important allowable and non-allowable VA loan closing costs. Take a look.

VA loan

Allowable Costs

Loan Origination fee

Lenders charge a loan origination fee of 1 percent of the total loan amount to cover the costs associated with processing the loan. Some common administrative costs associated with processing a loan are- application fee, notary fee, document preparation fee,  and tax service fee.

Appraisal fee

It is common for lenders to order a property appraisal before approving a home loan. The aim of this exercise is to ensure the property’s worth is not less than the value claimed by the buyer. The average VA appraisal fee is around $400-$450 for a single family residence. The fee is non-refundable, even if the loan is not approved.

VA Funding fee

VA funding fee is charged by the VA to offset losses that arise when a borrower defaults. VA funding fee varies in the range of 1.25 percent to 3.3 percent of the total amount depending on the service type, and the down payment amount. Veterans drawing a disability compensation or widows of veterans who died in the line of duty are exempted from paying this cost.

Non-allowable Costs

Attorney fee

Hiring an attorney to help with the interpretation of the sales contract or a timely closure, attracts an attorney fee of around $400. The VA, however, does not allow VA loan borrowers to pay an attorney fee except the title work.

Notary fee

The notary will validate the transaction between you and the seller by verifying the signatures of parties involved. Notary fees usually varies between $2-$20. The actual amount will depend on the regulations of the state where you get the sale deed notarized.

Tax Service fee

Tax service fee is charged to ensure that buyers pay the due property taxes. In case of conventional loans, the cost has to be paid by the buyer, however, VA does not allow veterans to pay this cost.


Closing costs form a major part of the home buying costs. Buyers can negotiate with the seller to pay a part of their closing costs as the VA allows sellers to pay up to 4 percent of the home loan as a part of the closing costs. Veterans can also finance closing costs into the loan,however, that would mean a higher monthly payment obligation.


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