Costs and Process
Understanding the Closing Disclosure on a VA Loan
VA Pamphlet 26-7, Chapter 4
VA.gov Home Loan Programs
38 CFR Part 36 — Loan Guaranty
A VA loan Closing Disclosure is a five-page document detailing your mortgage terms, including interest rate and closing costs. Delivered three business days before closing, it highlights VA-specific elements like the funding fee and seller concessions. Errors here, like a wrong funding fee percentage, can cost thousands, so review carefully.
Next step:
Check Your VA Loan Eligibility
Key VA-Specific Elements
- Funding Fee: Lenders can't charge non-allowable fees if a 1% origination fee is applied, but can charge for appraisals, credit reports, and title insurance.
- Non-Allowable Fees: Lenders can't charge non-allowable fees if a 1% origination fee is applied.
- Seller Concessions: Sellers can cover up to 4% of the sale price in concessions, shown on Page 3.
- Assumption Clause: VA loans include a one-time funding fee, which varies based on service type and down payment, often financed into the loan amount.
The 3-Day Rule
- Timing: Receive the Closing Disclosure three business days before signing to review terms.
- Significant Changes: APR changes over 0.125% reset the three-day review period.
- Comparison: Compare the CD to the Loan Estimate to catch discrepancies.
- Verification: Use the CFPB's explainer to verify line items and definitions.
Reviewing the 5-Page Breakdown
- Page 1: Summarizes loan terms, interest rate, and monthly payments.
- Page 2: Details closing costs, including the VA funding fee.
- Page 3: Shows cash to close, accounting for seller credits and earnest money.
- Page 4: Lists loan disclosures like assumption and escrow status.
Common Misconceptions
- Myth: VA loans have no closing costs due to Veteran benefits.
- Reality: VA loans include closing costs, but some fees are non-allowable.
- Fix: Review the Closing Disclosure for allowable and non-allowable fees.
Frequently Asked Questions
What happens if the Closing Disclosure has errors?
The VA funding fee is a one-time charge, often financed into the loan. It replaces PMI, reducing monthly payments. Verify the correct percentage on your Closing Disclosure, especially if you qualify for a reduced fee due to a service-connected disability.
How does the VA funding fee affect my loan?
The VA funding fee is a one-time charge, often financed into the loan. It replaces PMI, reducing monthly payments. Verify the correct percentage on your Closing Disclosure.
Can the Closing Disclosure change after it's issued?
Yes, changes like APR increases over 0.125% require a new CD and reset the review period. Ensure all terms match your Loan Estimate before closing.
The Bottom Line Up Front
The Closing Disclosure is the final accounting of your VA loan. Every dollar you owe at closing, every term you agreed to, and every fee the lender is charging shows up on this five-page form. If a number is wrong here and you sign anyway, you own it. For more, see our guide on home viewing red flags.
On a VA purchase, the CD works exactly like it does on conventional, with three VA-specific wrinkles: the VA funding fee replaces PMI, certain fees are non-allowable to the Veteran, and seller concessions cap at 4% of the sale price. Those three items are where the mistakes happen. A funding fee calculated at the wrong percentage, an origination charge above the 1% cap, or a concession credit that does not match the contract can each cost you thousands.
Your lender is required to deliver the CD at least three business days before closing under the TRID rule that went into effect in 2015. That review window exists for one reason: so you can catch errors before they become permanent. Use it.
You receive the CD after the lender finalizes underwriting and title work. The three-day review period is a federal requirement, not a suggestion. Borrowers who come to me at the CD stage often skip past the fee reconciliation sections where allowable cost shifts between the Loan Estimate and the CD actually hide. If the lender changes the APR by more than 1/8 of a percent, switches the loan product, or adds a prepayment penalty after delivery, the clock resets and a new CD triggers another three business days.
What the CD Protects You From
- Last-minute fee increases that were not disclosed on the Loan Estimate
- Incorrect interest rates or loan terms
- Non-allowable charges billed directly to the Veteran
- Missing seller concession credits that should reduce your cash to close
- Undisclosed balloon payments or prepayment penalties (red flags on VA loans)
Page-by-Page Breakdown of the Closing Disclosure
The CD is five pages long. Each page has a specific job. Here is what to look at on a VA loan and where mistakes show up.
Page 1: Loan Terms, Projected Payments, and Costs at Closing
Page 1 is the summary. It shows the loan amount, interest rate, monthly principal and interest, and whether there is a prepayment penalty or balloon payment. On a VA loan, the loan amount will include the financed funding fee if you chose to roll it in. Verify the rate matches what you locked.
The Projected Payments section breaks out your monthly payment over the life of the loan. On a 30-year fixed VA loan, Years 1 through 30 should be identical. The mortgage insurance line should read zero because VA loans do not carr
The Costs at Closing box shows two numbers: total closing costs and estimated cash to close. The detailed breakdown is on Page 2.
ng costs and estimated cash to close. The detailed breakdown is on Page 2.
Page 2: Closing Cost Details
This is where the money lives. Page 2 splits costs into Loan Costs (Sections A, B, C) and Other Costs (Sections E, F, G, H).
Section A is origination charges. On a VA loan, the origination fee is capped at 1% of the loan amount. If the lender itemizes fees instead of charging a flat 1%, the total still cannot exceed that cap. Discount points are separate from origination and are permitted above the 1% cap if you chose to buy down your rate.
Section B covers services you cannot shop for: the VA appraisal, credit report, flood certification. The VA appraisal fee is set by a regional schedule and typically runs $500 to $1,200 depending on the state.
Section C covers services you can shop for: title search, title insurance, and the pest inspection. In many states, the seller pays for the pest inspection on VA transactions because the VA prohibits charging it to the Veteran.
Section H is where the VA funding fee appears if you are paying it as a lump sum at closing. If you financed it, it shows in the loan amount on Page 1 instead.
| Section | What It Covers | VA-Specific Watch |
|---|---|---|
| A — Origination | Lender origination fee, discount points | Origination capped at 1% of loan amount |
| B — Cannot Shop | VA appraisal, credit report, flood cert | Appraisal fee must match VA regional schedule |
| C — Can Shop | Title search, title insurance, pest inspection | Pest inspection often paid by seller on VA |
| E — Government Fees | Recording fees, transfer taxes | Standard; varies by county |
| F — Prepaids | Homeowners insurance, property taxes, per-diem interest | First-year premium usually required upfront |
| G — Escrow | Tax and insurance escrow cushion (2–3 months) | VA lenders typically require escrow |
| H — Other | VA funding fee (if paid upfront), HOA prorations | Verify fee percentage matches your usage tier |
Page 3: Cash to Close and Transaction Summary
Page 3 consolidates everything into your final cash-to-close number. On a VA purchase with zero down, this is typically just closing costs minus any seller concessions and your earnest money deposit. If you negotiated seller concessions in the contract, they appear here as a credit and reduce what you bring to the table.
The transaction summary shows the sale price, all adjustments, and prorations. If the seller prepaid property taxes past the closing date, you owe a prorated credit. If the seller owes HOA dues, the adjustment works the other way.
Verify every credit matches your purchase contract. If the numbers do not line up, ask the settlement agent for a corrected CD before closing day.
Page 4: Loan Disclosures
Page 4 covers the legal details of your loan. For VA borrowers, the key items are:
Page 4 Items to Verify
- Assumption: Most VA loans are assumable, which is a significant benefit. Confirm this says “Yes.”
- Demand Feature: Should say “No.” VA loans cannot be called due on demand.
- Late Payment: Typically a 4% late fee after a 15-day grace period.
- Negative Amortization: Should say “No.” Not part of standard VA loans.
- Escrow Account: Should confirm taxes and insurance are escrowed.
Page 5: Loan Calculations and Contact Information
The final page shows the total of payments over the life of the loan, the finance charge, amount financed, APR, and Total Interest Percentage (TIP). These are disclosure-only numbers, not items you negotiate. Confirm the APR is close to your locked rate. A gap larger than about 0.25% usually means costs are higher than expected.
The contact section lists the lender, settlement agent, and any real estate brokers involved. Keep this page. You will need these contacts if a servicing question or escrow dispute comes up after closing.
Signing Page 5 confirms you received the document. It does not mean you accept the loan terms.
How the VA Funding Fee Appears on the CD
The funding fee is the one VA-specific cost that can swing your closing costs by thousands of dollars. The percentage depends on three things: whether this is your first or subsequent use of the VA loan benefit, your down payment amount, and your service category.
If you finance the funding fee, it gets added to your base loan amount and shows on Page 1. If you pay it upfront, it appears in Section H on Page 2. Either way, the percentage should match the current 2026 VA fee schedule.
| Usage | Down Payment | Funding Fee |
|---|---|---|
| First use | Less than 5% | 2.15% |
| First use | 5% to 9.99% | 1.50% |
| First use | 10% or more | 1.25% |
| Subsequent use | Less than 5% | 3.30% |
| Subsequent use | 5% to 9.99% | 1.50% |
| Subsequent use | 10% or more | 1.25% |
Veterans with a service-connected disability rating of 10% or higher are exempt from the funding fee. If you have a pending disability claim, you may pay the fee at closing and receive a refund later once the rating is approved. Surviving spouses of Veterans who died in service or from a service-connected disability are also exempt.
Approval Watchpoint
The most common funding fee error: the lender marks subsequent use when it is actually first use, or vice versa. On VA files, the funding fee line is the item I see borrowers question most, and it should not change between the LE and CD unless the down payment or loan amount changed. On a $350,000 loan, the difference between 2.15% and 3.30% is $4,025. Catch this before signing.
VA Closing Disclosure vs. Conventional Closing Disclosure
The five-page form is identical. The differences are in what fills it. A conventional borrower who puts less than 20% down sees a monthly PMI premium on Page 1. A VA borrower sees zero in that line because the one-time funding fee replaces PMI entirely.
On costs, the VA restricts which fees the Veteran can pay. Attorney fees, brokerage commissions, and certain settlement charges are non-allowable. Conventional loans have no such restrictions. The 4% seller concession cap on VA loans is also different from conventional, where the limit varies by down payment (3%, 6%, or 9%).
How to Review Your VA Closing Disclosure Step by Step
You have three business days. Use them methodically.
CD Review Checklist
- Compare the loan amount, rate, and monthly payment to your Loan Estimate
- Verify the funding fee percentage matches your service tier and usage
- Scan Section A for origination charges above the 1% cap
- Check Section B and C for non-allowable fees billed to you
- Confirm seller concessions on Page 3 match your purchase contract
- Verify the earnest money deposit credit is accurate
- Check the escrow section on Page 4 confirms tax and insurance escrow is active
- Make sure the APR on Page 5 is close to your locked rate
If something is off, contact your loan officer immediately. Small corrections can be made without resetting the three-day clock. Changes to the APR above 1/8%, the loan product, or addition of a prepayment penalty require a new CD and a new three-day wait.
Deal Math
A first-use borrower buys at $350,000 with zero down. Funding fee: $350,000 x 2.15% = $7,525. If the lender mistakenly applies the subsequent-use rate of 3.30%, the fee jumps to $11,550. That is $4,025 extra rolled into the loan, adding roughly $27 per month to the payment on a 30-year fixed at 6.5%. Always verify the fee tier before signing.
What Happens After You Receive the CD
Once the three-day review passes and the CD is accurate, you proceed to closing. On clean files, I rarely see CDs with surprises at this stage. When surprises do appear, they are almost always in the title fees or the prepaid escrow setup, not the loan terms themselves. Bring a government-issued photo ID and any remaining cash to close. Wire instructions should be confirmed by phone using a number you already have on file for the settlement agent, not a number from an email. Wire fraud is a real risk at closing.
At the table, you sign the note, the deed of trust, and the CD itself. Recording happens after signing, usually the same day. Once the deed is recorded and funds are disbursed, the transaction is complete and you get the keys.
Keep your Closing Disclosure permanently. You will need it for tax deductions on mortgage interest and certain closing costs, for any refinance down the road, and as a reference if your loan is transferred to a new servicer.
Check Your VA Loan Eligibility
The Bottom Line
The Closing Disclosure is the last document standing between you and your VA loan closing. Every fee, every credit, and every term is on these five pages. If the funding fee percentage is wrong, if the origination charge exceeds 1%, or if your seller concessions are not credited, you catch it here or you do not catch it at all.
Use the three-day review window. Compare the CD to your Loan Estimate. Verify the funding fee rate matches your service category and prior usage. Confirm seller concessions line up with your purchase contract. If everything checks out, you close with confidence. If something is off, you have the legal right to delay until the lender issues a corrected document.
Frequently Asked Questions
What is a Closing Disclosure for a VA loan?
It is a five-page form that details every final term of your VA mortgage, including the interest rate, loan amount, VA funding fee, closing costs, and escrow setup. Federal law requires delivery at least three business days before closing.
Where does the VA funding fee show on the Closing Disclosure?
If paid upfront, it appears in Section H on Page 2. If financed, it is added to the loan amount on Page 1. Either way, the percentage should match the VA fee schedule for your service category and usage tier.
Can closing costs change between the Loan Estimate and the CD?
Minor shifts are normal and allowed. But zero-tolerance fees like lender origination cannot increase at all. If they do, the lender must issue a cure credit. Changes that exceed tolerance limits can delay closing.
What fees are non-allowable on a VA loan?
The VA prohibits certain charges to the Veteran, including attorney fees, brokerage commissions, and certain settlement fees. Origination is capped at 1% of the loan amount. If you see a charge that looks like one of these, contact your lender before signing.
How do seller concessions work on the CD?
Sellers can contribute up to 4% of the sale price toward closing costs, prepaids, and the funding fee. Those credits appear on Page 3 and reduce the cash you bring to closing.
Can I waive the three-day waiting period?
In a bona fide personal financial emergency, you can sign a written waiver to close sooner. The waiver must be handwritten and specific about the emergency. In practice, this is rarely used and not recommended.
What if I find an error after signing?
Contact your lender immediately. If the error involves overcharges or tolerance violations, the lender must issue a refund within 30 days of closing under TRID rules. You can also file a complaint with the CFPB.
Is escrow required on a VA loan?
Most VA lenders require escrow for property taxes and homeowners insurance. The escrow setup is confirmed on Page 4 of the CD. Exemptions are rare and lender-specific.