How Much Are VA Loan Fees?
January 02, 2013 By Bruce Reichstein No comments
One common type of question we get in the comments section involves VA loan fees associated with VA home loans. For example, “How much are the fees for a VA loan for a loan of (insert dollar amount here)?”
The only trouble with answering a question like this is that there is no single dollar amount that can be calculated for the fees associated with a VA mortgage. It depends on the lender, the amount of the loan, and a variety of other factors.
For example–no two housing markets are exactly alike, and the VA appraisal fee varies depending on the state. The amount of your VA appraisal fee in New Jersey likely won’t match the amount charged in Florida.
Borrowers will have to pay itemized fees such as the VA appraisal fee, many of which are priced on an individual basis depending on the market. Then there’s something called the lender’s flat fee, which VA Pamphlet 26-7 describes as follows:
“In addition to the ‘itemized fees and charges,’ the lender may charge the veteran a flat charge not to exceed one percent of the loan amount. Calculate the one percent on the principal amount after adding the funding fee to the loan, if the funding fee is paid from loan proceeds (except Interest Rate Reduction Refinancing Loans (IRRRLs). The lender’s flat charge is intended to cover
all of the lender’s costs and services which are not reimbursable as “itemized fees and charges.'”
In order to get a realistic amount–an estimate–of the amount of fees a borrower might have to pay as part of the VA loan, it’s best to speak directly with your loan officer. Since these fees and expenses vary from market to market, your lender will have direct experience with these amounts. Keep in mind that your loan officer likely will not be able to give you an exact dollar amount–doing otherwise might constitute a commitment which the lender cannot make without actually calculating all the loan costs beforehand. This is not possible.
Why not? Because some of those fees aren’t set until they are actually charged. For example, if a VA appraiser (who charges a fee that must be paid by the borrower) finds issues with a property and recommends corrections to those issues as a condition of loan approval, a compliance inspection may also be required. This also costs money, and will such inspections could not be realistically added to the list of itemized fees and expenses until the appraisal has actually happened.
Because of situations like these, borrowers expect to talk to a loan officer about estimates for VA loan-related fees rather than actual numbers–those numbers will be made available when the actual dollar amounts can be calculated.
Do you have questions about VA home loans? Ask us in the comments section.