VA Loan Fees and Charges: The Basics
Buying a home with a VA loan means saving and budgeting for fees and expenses associated with the purchase of your new property. VA loan fees include the VA loan funding fee, appraisal fees, any required compliance inspections as a result of the appraisal, lender’s fees and more.
The VA has a set of rules that govern the payment of VA loan fees–what do you need to know about these rules? Let’s examine what the VA loan rulebook (VA Pamphlet 26-7) has to say about fees:
To begin, Chapter 8, titled, “Borrower Fees and Charges and the VA Funding Fee” offers an overview:
“The veteran can pay a maximum of:
• Reasonable and customary amounts for any or all of the “Itemized Fees and Charges” designated by VA, plus
• A one percent flat charge by the lender, plus
• Reasonable discount points.
Note: Some special provisions apply to construction, alteration, improvement, and repair loans.”
Chapter 8 goes on to list a set of itemized charges the borrower will need to anticipate paying including a credit report fee, any required hazard insurance, recording fees, title examination and insurance, flood zone determination where needed and several other itemized expenses.
These fees are regulated by the VA. The lender cannot, for example, mark up the actual cost of services rendered by appraisers, credit agencies, etc. Chapter 8 tells us:
“Whenever the charge relates to services performed by a third party, the amount paid by the borrower must be limited to the actual charge of that third party. Example: If the lender obtains a credit report at a cost of $30, the lender may only charge the borrower $30 for the credit report. The
lender may not charge $35, even if it believes that a $5 handling charge is fair.”
VA loan rules also prevent the borrower from being charged for services rendered that were already paid by another potential loan applicant:
“In addition, the borrower may not pay a duplicate fee for services that have already been paid for by another party.
• An appraisal is completed on a property and paid for by a prospective purchaser, but the sale is never completed. A second purchaser applies for a loan before the validity period of the Notice of Value (NOV) expires. The lender uses the same NOV. The lender may not charge the second purchaser an appraisal fee if no second appraisal is ordered.
• A survey or flood zone determination, if the lender elects to use an existing
survey or flood determination.”
If you have questions about VA loan fees or expenses, talk to your loan officer or contact the VA directly at 1-800 827-1000.
Do you have questions about VA home loans or refinance loans? Ask us in the comments section.