VA Loan Closing Costs: How to Calculate Your Total Investment

Picture this: after attending dozens of open houses, you finally find your dream home! Once your offer is accepted, there’s one more thing standing between you and your new home: closing costs

In 2021, the average closing costs for buying a single-family home added up to $6,837, according to real estate data firm ClosingCorp. While that might not sound like a lot when your down payment is tens of thousands of dollars, an almost $7,000-bill at the end of a long home search is a massive expense when it’s unexpected!

Now, though, how does this affect you if you’re purchasing a home using a VA loan? As you hopefully already know, the VA home loan limits for 2021 are limitless, meaning that you can take out a loan for as much as you want as long as you meet the requirements.

This article will cover the different types of closing costs and how to easily calculate the total amount you’ll need, so you can feel confident and prepared come closing day. 

What is Included in VA Loan Closing Costs?

VA loans work differently from standard mortgage loans in a lot of ways. Here are some of the most common closing costs you can expect to pay for your VA loan.

VA funding fee

The VA funding fee is required for every person taking out a VA home loan unless you qualify for an exception. For example, the cost is waived for disabled veterans or spouses of vets that died while in service. The VA funding fee varies depending on a few factors but is usually 2.3% of the total loan amount.

Appraisal costs

The VA requires all loan applicants to get an appraisal before approving a loan. This requirement is in place to protect homebuyers from paying more for a property than it’s worth. Appraisal fees vary by location and can be pricey, so it’s best to plan for the cost.

Title check fee

Your lender will require that you pay for a title check to make sure there aren’t any liens, claims, or other title-related issues on the property that could surface after closing. Thankfully, title check fees aren’t too costly– typically costing less than $200.

Loan origination charge

Lenders charge a loan origination fee to cover the costs of processing your loan application. This fee cannot exceed 1% of the total loan amount for VA loans. This is a huge advantage over traditional mortgage loans, and often one of the major reasons why veterans opt for a VA loan versus a traditional mortgage loan.  

Credit report fee

Lenders will check your credit report to ensure your credit meets the VA loan requirements. A small fee is charged to access your report, usually between $25 and $50.

It’s important to note that most closing costs are negotiable. You can request that the home seller covers a portion of your closing costs. However, the amount the seller agrees to pay will vary depending on the housing market. For example, if you are in an area with low demand for homes, you might have a better chance of getting some of your costs covered.

How to Calculate Total VA Loan Closing Costs

VA loan closing costs typically fall between 3-5% of the total loan amount. However, closing costs can vary significantly depending on your loan type, lender, and location. 

Luckily, you can easily calculate your closing costs by using an online calculator. Simply enter your closing date, home price, and down payment information, and you’ll receive an estimate of the closing costs you can expect to pay. 

Though you will likely end up paying some of your loan’s closing costs upfront, there are ways to limit how much you end up paying out of pocket. For example, the VA funding fee can be rolled into your loan, so you can pay it over time instead of all at once. 

Where to Find More Financial Resources for Veterans

Financial resources and websites are rarely orientated specifically for veterans. At Wealth Stack, we’re trying to change that. We’re a veteran-founded, owned, and operated financial education platform. And, our mission is to make financial information like VA loan closing cost calculators more accessible.

If you’re a veteran looking for more information on finances, read through some of our other helpful guides:

Aside from learning how to budget wisely and invest in yourself, learning how to invest in stocks as a way to grow long-term wealth is a great idea.

Download the Wealth Stack app for free to learn how to invest. There, you can start learning through our helpful (and free) video courses. We’ve even got a special section on Veteran Finances!