VA Non Allowable Fees are fees Veterans using a VA home loan cannot pay. However, a seller, the veterans real estate agent and/or buyer’s lender may pay for the VA Non Allowable Fees.
What are VA Non Allowable Fees?
In short, VA Non Allowable Fees are fees Veteran’s cannot pay when using a VA home loan. In addition, these fees are not simple to calculate. Lastly, VA Non Allowable fees differ from loan to loan based on several factors including. For example, the following all impact the Non Allowable cost total:
- State VA Loan is originated in
- Loan amount
- VA lender’s fee structure
How Much are VA Non Allowable Fees?
No one size fits all fee total exists. In fact, 2 VA Non Allowable Fee calculations exist. However, both are based on a VA lender charging or not charging a 1% origination fee.
Method 1: No 1% origination fee
Without a 1% origination fee charged to the veteran, the VA Non Allowable Fee list is short. In fact, in some states the fee total is $0. In other words, in states the total is $0 the veteran can pay ALL their closing costs. However, be aware the total differs state to state.
Below are the fees veteran’s cannot pay when their VA lender does not charge a 1% origination fee.
VA Non Allowable Fees (Method 1)
- 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 OR may not pay for this depending on state. Learn More about VA termite rulesopens PDF file .
Itemized Fees
Under method 1, the veteran also cannot pay for fees on the “Itemized Fee” list (below is sample list) 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.
- Lender’s appraisals required in addition to 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
- Escrow fees or charges
- Notary fees
- Trustee’s fees or charges
- Loan application or processing fees
- Tax service fees
Method 2: 1% origination fee
Conversely, with a 1% origination fee charged, the VA Non Allowable Fee list is longer than under Method 1. Below are some of the fees Veterans CANNOT pay when 1% origination fee is charged.
VA Non Allowable Fees (Method 2)
- 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 required in addition to VA appraisal
- Lender’s inspections
- 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
- Escrow fees or charges
- Notary fees
- Trustee’s fees or charges
- Tax service fees
Pest/Termite Inspection Fee:
Veteran may or may not pay for this depending on state. Check opens in a new windowthis grid opens PDF file for state details.
Why 2 VA Non Allowable Methods?
In Conclusion, VA does not want veterans over paying for home loan closing costs. In fact, VA feels closing costs should not exceed 1% of their loan.
As a result, under either method VA limits how much veterans pay in closing costs.