VA Non Allowable Fees

VA does not allow a Veteran using a VA home loan to pay certain closing costs. They call these “VA Non Allowable Fees.”  The seller, buyer’s agent and/or buyer’s lender may pay for the VA Non Allowable Fees.

Calculating VA Non Allowable Fees:

There are 2 ways to calculate VA Non Allowable Fees on a VA home loan.  Both are based on whether or not the VA lender charges a 1% origination fee.

Method 1: Lender NOT charging 1% origination fee

If a VA lender does NOT charge a 1% origination fee, the VA Non Allowable Fee (fees veteran cannot pay) list is short.  Under this method the veteran also cannot pay for fees on the “Itemized Fee” list (below) that exceed 1% of the loan amount.  The veteran CAN pay for Itemized Feeds up to 1% of the loan amount.  The Itemized Fees total that exceeds 1% of the loan amount also becomes non allowable and veteran cannot pay.

VA Non Allowable Fees
Veteran CANNOT ever pay these fees

  • Attorney fee charged as a benefit to the lender
  • Mortgage broker fee
  • Realtor commission
  • Prepayment penalties
  • HUD/FHA Inspection fee from builder

Pest/Termite Inspection Fee:
Veteran may pay for this depending on state (AZ allows vet to pay). Check this grid for state specifics.

Itemized Fees
Veteran CAN pay these fees up to an aggregate dollar amount equal to 1% of loan amount

  • Lender’s appraisals that are required in addition to the VA appraisal
  • Lender’s inspections (except in construction loan cases)
  • Loan closing or settlement fees
  • Document preparation fees
  • Preparing loan papers or conveyance fees
  • Attorney’s services other than for title work
  • Photographs
  • Interest rate lock-in fees
  • Postage and other mailing charges, stationery, telephone calls, and other overhead
  • Amortization schedules, pass books, and membership or entrance fees
  • Escrow fees or charges
  • Notary fees
  • Commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser
  • Trustee’s fees or charges
  • Loan application or processing fees
  • Fees for preparation of truth-in-lending disclosure statement
  • Fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not
  • Tax service fees

Method 2: Lender charging 1% origination fee

When a VA lender charges a 1% origination fee the VA Non Allowable Fee list much longer than it is under Method 1.

VA Non Allowable Fees
Veteran CANNOT ever pay these fees when lender charges 1% origination fee

  • Attorney fee charged as a benefit to the lender
  • Mortgage broker fee
  • Realtor commission
  • Prepayment penalties
  • HUD/FHA Inspection fee from builder
  • Lender’s appraisals that are required in addition to the VA appraisal
  • Lender’s inspections (except in construction loan cases)
  • Loan closing or settlement fees
  • Document preparation fees
  • Preparing loan papers or conveyance fees
  • Attorney’s services other than for title work
  • Photographs
  • Interest rate lock-in fees
  • Postage and other mailing charges, stationery, telephone calls, and other overhead
  • Amortization schedules, pass books, and membership or entrance fees
  • Escrow fees or charges
  • Notary fees
  • Commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser
  • Trustee’s fees or charges
  • Loan application or processing fees
  • Fees for preparation of truth-in-lending disclosure statement
  • Fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not
  • Tax service fees

Pest/Termite Inspection Fee:
Veteran may pay for this depending on state.  Check this grid for state details.

Why 2 VA Non Allowable Methods?

The VA feels a 1% origination fee (if charged) should cover all “itemized” closing costs.  The VA does not want veterans over paying for home loan closing costs.  On cases where a 1% is not charged, VA feels certain fees (“Itemized Fees”) should not exceed 1% of the loan.

Arizona VA Loan Resources:

VA Mortgage Overview
Property Requirements VA
VA Loan Eligibility (COE)
Closing Cost Rules VA
VA Funding Fee
Loan Limits VA
VA Streamline Refinance

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

By Jeremy House
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