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 Arizona VA home loan closing costs.

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

1. The 4% Costs 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% limit

  • Seller payment of the VA Funding Fee
  • Seller’s pre-payment of property taxes and insurance
  • Payment of extra points to provide a permanent interest rate buy-down
  • Seller paying off credit balances or judgments on behalf of the VA borrower
  • 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 allowed under 4% Rule 

2. Non-Recurring Closing Costs

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

  • Title Work
  • Recording fees
  • Appraisal
  • Credit report
  • Discount points
  • 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 Arizona VA mortgage expert.  Contact us today with your VA home loan questions.

Other 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:

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