Closing Costs VA Home Loans

Understanding VA Non Allowable Loan Fees

Understanding VA Non Allowable Loan Fees
Treasury Funds Home Loans, Inc.

When you’re in the process of purchasing a home, closing costs can quickly accumulate. However, if you’re utilizing a VA loan for your home purchase, specific rules dictate which fees lenders can charge you.

Fortunately, VA loans come with a list of non-allowable fees, helping you manage your closing costs effectively.

Here’s a breakdown of what you should know about these fees if you’re considering buying a home with a VA loan.

Understanding VA Non-Allowable Fees

VA loans, backed by the U.S. Department of Veterans Affairs, aim to offer veterans an affordable path to homeownership. To ensure this affordability, the VA closely monitors the fees that veterans are required to pay at closing. VA non-allowable fees refer to costs that the department prohibits lenders from charging borrowers during the closing process. Borrowers using a VA loan won’t encounter these non-allowable fees at closing.

Factors Determining Your Non-Allowable Fees for a VA Loan

While closing with most home loans involves a robust list of fees, the VA loan limits lenders to charging a 1% mortgage origination fee. This flat fee is intended to cover the lender’s costs, including escrow fees, tax service fees, document preparation fees, and loan application fees. This 1% flat fee simplifies the process for borrowers, providing clarity on the amount of fees owed at closing and minimizing surprises.

Who May Cover the VA Non-Allowable Loan Fees?

The VA loan has strict guidelines regarding which fees the buyer can pay. If a cost falls under the category of VA non-allowable fees, another party must cover the expense. In some cases, the seller may cover VA loan fees, while in others, the lender or real estate agent may absorb certain fees. However, it’s essential to note that if the seller covers VA non-allowable fees, they may adjust the sale price of the home to compensate for these costs.

Common VA Allowable and Non-Allowable Fees

To navigate the fees associated with VA loans effectively, it’s crucial to understand both allowable and non-allowable fees:

VA Allowable Fees

  • VA Funding Fee
  • VA Appraisal Fee
  • Credit Report Fee
  • Origination Fee
  • Title Insurance
  • Recording Fee
  • Discount Points
  • Flood Zone Determination Fee
  • Mailing Fees for Refinancing

VA Non-Allowable Loan Fees

  • Real Estate Attorney Fees
  • Real Estate Broker Fees
  • Real Estate Agent Fees
  • Application Fees
  • Escrow Fees
  • Rate Lock Fees
  • Appraisals or Inspections Ordered by the Lender


VA non-allowable fees are designed to safeguard veterans from excessive costs. The 1% origination fee cap ensures that lenders have the necessary funds to operate profitably, while the absence of additional closing costs empowers VA borrowers to proceed with confidence during the closing process.

Contact Treasury Funds Home Loans, Inc. for all your VA Mortgage Loan needs