How VA Non-Allowable Fees Can Help You Save Money on Your Home Purchase
When you’re buying a home, closing costs can add up quickly. But if you’re purchasing a home through the VA loan, there are rules about which fees a lender can charge you. Luckily, there are many VA non-allowable fees that will help you keep your closing costs under control.
Here’s what you need to know about these fees if you plan to purchase your home with a VA loan.
Key Takeaway
VA non-allowable fees can be a great way for veterans to save money on their home purchases. These fees are limited by the VA, which means that lenders cannot pass them on to the veteran who is taking out a loan. This often includes extra costs such as appraisal fees, inspection fees, title search fees, and more. By being aware of these fees, veterans can get a better handle on their home-buying budget and have great savings in the long run.
What Are VA Non-Allowable Fees?
VA non-allowable fees are those fees that, according to the Department of Veterans Affairs (VA), cannot be charged to veteran borrowers. These fees are determined in order to protect veterans from being taken advantage of or charged with unnecessary costs as they purchase their home. They include all lender fees, such as origination points, broker fees, and processing fees. They also include certain title fees, such as recording fees and administrative costs.
VA non-allowable fees are important to understand, because they can help you save money on your home purchase. Since lenders cannot charge VA borrowers for these fees, you may be able to negotiate a lower price when making an offer on your house.
What Determines Your Non-Allowable Fees For A VA Loan?
The amount of non-allowable fees for a VA loan is determined by the Department of Veterans Affairs (VA). The VA sets a limit on the maximum amount of fees that lenders can charge veteran borrowers. These limits vary depending on the type of loan and terms but generally include all lender fees, such as origination points, broker fees, and processing fees.
What Are The Benefits Of VA Non-Allowable Fees?
The main benefit of VA non-allowable fees is that they allow you to keep your closing costs low when purchasing a home with a VA loan. Since these fees are set by the VA and cannot be charged to veteran borrowers, you may be able to negotiate a lower price when making an offer on your house. Furthermore, since lenders are prohibited from charging these fees, you can be sure that you’re getting the best deal possible on your loan.
Are VA Non-Allowable Loan Fees Paid By The Seller?
In most cases, VA non-allowable loan fees are not paid by the seller. Instead, they are typically paid for by the veteran borrower, either through their lender or through a third-party provider. However, there are certain circumstances when a seller may agree to pay some of these fees. For instance, if a seller is willing to offer a discount on the purchase price of a home, they may agree to cover some or all of the VA non-allowable loan fees.
List Of Common VA Allowable And Non-Allowable Fees
VA allowable fees are those fees that a lender is allowed to charge veterans under the Department of Veterans Affairs (VA) loan regulations. This includes mortgage origination fees, broker fees, processing fees, and other lender fees. It also includes certain title costs such as recording fees and administrative costs.
On the other hand, VA non-allowable fees are those fees that cannot be charged to veteran borrowers. This includes all lender fees, such as origination points, broker fees, and processing fees. It also includes certain title costs such as document preparation and attorney review/title opinions.
The VA sets a limit on the maximum amount of allowable and non-allowable fees so it is important to understand these limits if you are considering purchasing your home through a VA loan. This will help ensure that you get the best deal possible and keep your closing costs under control.
VA Allowable Fees
VA funding fee: This one-time fee is paid directly to the Department of Veterans Affairs to support the VA home loan program.
VA appraisal fee: You’ll need to pay for a VA appraisal to determine the value of the home.
Credit report fee: Lenders will need a copy of your credit report. This service should cost less than $50.
Origination fee: A lender may charge a flat fee of 1% of the loan amount to cover their costs. Or they may break up the allowable fees into an itemized list.
Title insurance: Title insurance is designed to protect the lender and buyer in case the property has claims against it. These claims might include outstanding liens or back taxes.
Recording fee: A recording fee covers the cost of transferring ownership of the property at the appropriate government office.
Any discount points you use: You can pay for reasonable discount points when using a VA loan.
Flood zone determination fee: You can pay a third party to determine whether a property is in a flood zone.
Mailing fees for refinancing: If you’re refinancing, you can pay for mailing charges associated with any necessary paperwork that needs to be mailed.
If you encounter a fee from your lender that isn’t allowed, then contact the Department of Veterans Affairs for assistance.
VA Non-Allowable Loan Fees
Here are the VA non-allowable fees that you need to consider.
Real estate attorney fees: Attorney fees are not allowed for VA home loans.
Real estate broker fees: You cannot pay for real estate broker fees when buying a home with a VA loan.
Agent or REALTOR® fees: VA borrowers cannot pay real estate agent fees. In many cases, these fees will be paid by the seller.
Application fees: The lender cannot charge you an application fee.
Escrow fees: You’ll likely need to fund the escrow account at closing. But you can’t pay any fees to set up the escrow.
Rate lock fees: Fees to lock in an interest rate are prohibited.
Appraisals or inspections ordered by the lender: Although you can pay for a VA appraisal, you cannot pay for additional appraisals ordered by the lender.
If you run into any of these fees, reach out to the VA.
Conclusion
The VA loan program is designed to help veterans purchase a home and get the best deal possible. By understanding which fees are allowable and non-allowable, you can ensure that your closing costs stay within the limits set by the Department of Veterans Affairs. If you encounter any fees not allowed under this program, be sure to contact the VA for assistance. With these tips in mind, you should have no problem finding an affordable mortgage option that meets your needs as a veteran homebuyer.