Understanding VA Loan Fees

VA loans are backed by the U.S. Department of Veterans Affairs, which means they come with some great benefits, like no down payment and lower interest rates.

But that doesn’t mean they’re entirely free of costs. The main fee you’ll run into is the VA funding fee, but there are other costs to factor in too, like closing costs, title fees, and the cost of the appraisal. We’ll get into all of these so you know what you’re signing up for.

The VA Funding Fee: The Big One

The VA funding fee is probably the biggest upfront cost you’ll encounter. It’s a percentage of your loan amount that goes toward funding the VA loan program. This helps keep the program running for future generations of veterans. It’s usually the biggest cost of all the fees, but the good news is that it’s optional to pay upfront. You can actually roll it into your loan, so you won’t have to pay it out-of-pocket.

The exact amount you’ll pay depends on a few factors, like whether this is your first VA loan and how much of a down payment you’re able to make.

2025 VA Funding Fee Rates

As you can see, the VA funding fee is a little higher if it’s your second VA loan. But if you put down a bigger down payment, the fee can be reduced.

Other Costs to Expect

While the VA funding fee is the biggest cost, there are a few other fees that you’ll need to be prepared for, such as closing costs. These are the fees associated with actually closing on your home. These costs can range anywhere from 2% to 5% of your loan amount, and they can vary depending on where you’re buying and the lender you choose.

Common Closing Costs:

• Appraisal Fees
  Every VA loan requires a home appraisal to make sure the home is worth what you’re paying for it. The appraisal can cost anywhere from $300 to $500, depending on where you’re located. The VA also requires a special appraisal, which checks whether the home meets certain standards to make sure it’s safe for you to live in.

• Title Insurance
  Title insurance is required to make sure there are no issues with the ownership of the property you’re buying. This fee can run anywhere from $500 to $2,000, depending on the value of the property.

• Loan Origination Fees
  Some lenders charge an origination fee for processing your loan. The VA caps this fee at 1% of the loan amount. This is a fee that most lenders charge, and it can add up depending on the size of your mortgage.

• Recording Fees
  These fees are typically paid to your county to officially record the transaction and legally transfer ownership of the property. This can range from $50 to $200.

VA Loan Costs to Plan for 

Additional Costs to Consider

While we’ve covered the most common costs, there are a few extra fees you may encounter during the VA loan process:

• Credit Report Fees: Lenders typically charge for pulling your credit report. While not a huge expense, it’s important to factor this in.
• Survey Fees: In some cases, your lender might require a property survey to confirm boundaries, especially if you’re purchasing land or if there are concerns over property lines.
• Escrow Fees: While not always required, many VA loans will have an escrow account to cover property taxes and insurance. Some lenders may charge fees for managing this account.
• Flood Certification Fee: If you live in an area prone to flooding, you might be required to pay a fee for flood certification to ensure your property isn’t in a flood zone

All of these closing costs can really add up, so it’s a good idea to plan for them ahead of time. Luckily, you can negotiate some of these costs with the seller.

For example, the seller can contribute up to 4% of the sales price toward your closing costs, which can help lower your out-of-pocket expenses.

How to Minimize VA Loan Fees

While you can’t avoid the VA funding fee unless you’re exempt, there are several ways you can reduce other costs associated with a VA loan:

• Ask the Seller to Pay Closing Costs
  As mentioned earlier, the seller can contribute up to 4% of the home’s purchase price toward your closing costs. This could include things like appraisal fees, title insurance, and even part of the VA funding fee.

• Roll the VA Funding Fee into Your Loan
  If you don’t want to pay the VA funding fee out-of-pocket, you can finance it by rolling it into your loan. This can help ease the burden of having to pay upfront, but it will increase your loan balance, so keep that in mind when budgeting for your monthly payments.

• Shop Around for Lenders
  Not all lenders charge the same fees. Some might offer lower loan origination fees or other cost-saving options. It’s worth comparing different lenders to find the best deal. At the VA Loan Network we match you with up to 3 different lenders so you can comparing rates and overall mortgage pricing with multiple lenders.

• Consider Lender Credits
  Some lenders offer lender credits in exchange for a slightly higher interest rate. This can be a good option if you want to reduce upfront costs and don’t mind paying a bit more in the long run.

How Long Does VA Loan Approval Take?

The process for getting a VA loan approved can take anywhere from 30 to 45 days. The timeline can be a little longer if there are issues with the appraisal or additional documentation is required.

“While the approval process can feel long, it’s typically worth the wait because of the low interest rates and no down payment requirements that VA loans offer,” says Sarah Adams, a mortgage broker who specializes in VA loans.

Is a VA Loan Right for You?

VA loans offer many benefits, including no down payment, competitive interest rates, and lower monthly payments. However, it’s important to understand the VA funding fee and other associated costs.

For some, these fees may be worth it given the overall savings a VA loan offers. For others, particularly those looking to buy a very inexpensive home, a conventional loan might be more cost-effective.

Before deciding whether a VA loan is right for you, take a good look at your financial situation and compare different loan options. Speak with a mortgage expert who can help you assess your eligibility and weigh the pros and cons of VA loans versus other mortgage types.

Frequently Asked Questions

What is the VA funding fee, and why do I need to pay it?
The VA funding fee is a one-time charge that helps fund the VA loan program. It varies based on factors like whether it’s your first VA loan and how much you’re putting down. It can be rolled into your loan if you don’t want to pay it upfront.

Can I get a VA loan with no down payment?
Yes, VA loans don’t require a down payment, which is one of their biggest advantages. You can finance the entire cost of the home as long as the appraisal meets or exceeds the purchase price.

What are the closing costs for a VA loan?
Closing costs for VA loans include the VA funding fee, home appraisal, title insurance, loan origination fees, and recording fees. These costs usually range from 2% to 5% of the loan amount.

Can I roll the VA funding fee into my loan?
Yes, you can roll the VA funding fee into your loan balance, which means you won’t have to pay it upfront. However, this will increase your monthly mortgage payments.

How long does it take to get approved for a VA loan?
The approval process typically takes 30 to 45 days from application to closing. Factors like appraisal time and missing documentation can affect the timeline.

What if I can’t afford the VA loan fees?
If you’re struggling to pay the VA funding fee or other closing costs, you can ask the seller to cover some of them, or roll the fees into your loan.

Can I use a VA loan for a second home?
VA loans are generally for primary residences, but if you’ve used your VA loan benefit before, you can use it again for a new home.

Are VA loans more expensive than conventional loans?
VA loans are often less expensive than conventional loans due to their no down payment requirement, lower interest rates, and no PMI. The VA funding fee is the primary additional cost.