VA Closing Costs – Who Can Pay What?

VA Closing Costs Rules

The VA regulates who may pay for what and how much each party may pay.  There are 3 rules that govern who can pay what VA closing costs.

1. The 4% Rule
2. Unlimited Non-Recurring Closing Costs Rule
3. VA Non-Allowable Costs

1. The 4% Rule

A VA borrower may receive up to 4% of the appraised value of the home they are buying in seller-paid closing costs.  The 4% total does NOT include non-recurring closing costs or bonafide discount points.

Costs included in the 4% concession limit:

1. Seller payment of the VA Funding Fee
2. Seller’s pre-payment of property taxes and insurance
3. Payment of extra points to provide a permanent interest rate buy-down
4. Seller paying off credit balances or judgments on behalf of the VA borrower
5. Gifts from the seller such as a television set or a microwave

Example of the 4% calculation:  
$300,000(appraised value) x 4%(max concession limit) = $12,000 total under 4% Rule 

2. Unlimited Non-Recurring Closing Costs Rule

In addition to the 4% rule, a VA borrower may also have a seller pay for 100% of fees categorized as Non-Recurring Closing Costs.

Non-Recurring Closing Costs:

1. Title Work
2. Recording fees
3. Appraisal
4. Credit report
5. Discount points
6. Other lender fees

3. VA Non-Allowable Fees

VA has designated specific fees a VA borrower cannot pay as “Non-Allowable”   The seller, the buyer’s agent and/or the buyer’s lender may pay for these fees.
Check out our informative page on VA Non-Allowable Fees

The HOUSE Team is your VA mortgage expert.  Contact us today with your VA home loan questions.

Arizona VA Loan Resources:

VA Mortgage Overview
Property Requirements VA
Loan Eligibility (VA COE)
VA Non-Allowable Fees
VA Funding Fee
Loan Limits VA
VA Streamline Refinance

Team Phone:  602.435.2149
Team Email:  Team@JeremyHouse.com