Who Pays Closing Costs on a VA Loan? Buyer vs Seller Fees Explained

Last updated: January 2026

Quick answer

On a VA loan, buyers pay certain allowable closing costs, sellers can pay many others, and some fees are strictly prohibited from being charged to veterans. VA rules are designed to reduce out-of-pocket costs for buyers while allowing flexibility through seller concessions and lender credits.

Closing costs often create confusion for VA buyers and sellers alike. Veterans may hear that sellers “have to pay everything,” while sellers sometimes worry that VA loans shift high costs onto them. Neither assumption is accurate.

VA loans follow a clear framework that divides responsibility between buyer, seller, and lender, with additional protections that do not exist in conventional or FHA financing. Understanding these rules helps buyers budget correctly and helps sellers evaluate VA offers with confidence.

What closing costs are included on a VA loan?

Closing costs are the fees required to complete a real estate transaction and finalize a mortgage. On a VA loan, many of these costs are similar to those of other loan types, but they are more tightly regulated.

Typical VA loan closing costs include:

• Lender origination charges
• Appraisal and credit report fees
• Title insurance and escrow services
• Recording fees and transfer taxes
• Prepaid items such as homeowners’ insurance and property taxes

VA rules determine which of these costs can be paid by the buyer, which can be paid by the seller, and which cannot be charged to the buyer.

VA closing costs for the buyer

VA borrowers may pay “allowable” closing costs that are considered reasonable and customary.

Common buyer-paid VA closing costs include:

• VA appraisal fee
• Credit report fee
• Title insurance and escrow fees
• Recording fees
• Prepaid taxes and homeowners insurance

In addition, buyers may pay:

• VA funding fee, unless exempt
• Discount points, if choosing to reduce the interest rate

Although VA loans often require less cash upfront than other loan types, buyers should still plan for these expenses unless they are offset by seller concessions or lender credits.

Fees that VA buyers are not allowed to pay

VA loans include strict limits on fees that cannot be charged to veterans. These protections are a major advantage of the program.

VA buyers are prohibited from paying:

• Broker fees
• Attorney fees related to loan preparation
• Processing or underwriting add-on fees
• Excessive origination charges beyond VA limits

Lenders may charge a flat 1% origination fee or itemize certain approved charges, but total fees must remain within VA guidelines. Any non-allowable fees must be paid by the seller or lender, not the buyer.

Can the seller pay all of my closing costs?

In many cases, yes. Sellers may pay a wide range of costs on behalf of VA buyers, commonly referred to as seller-paid closing costs or seller concessions.

A seller may cover:

• Buyer’s allowable closing costs
• Title and escrow fees
• Recording fees
• Certain non-allowable fees the buyer cannot pay
• The VA funding fee

Seller contributions can significantly reduce a buyer’s cash-to-close requirement and make a VA-backed offer more competitive.

Whether a seller can pay all closing costs depends on several factors, including the purchase price and appraised value, local market conditions, and the overall strength of the offer.

In highly competitive markets, sellers may be less willing to cover every cost, but partial concessions are common and often negotiable.

Understanding VA seller concessions

VA loans allow seller concessions of up to four percent of the purchase price. This is more flexible than many conventional loan programs.

Seller concessions may be used for:

• Paying buyer closing costs
• Covering prepaid taxes and insurance
• Paying the VA funding fee
• Paying off buyer debts, such as collections or judgments

Normal closing costs paid by the seller do not count toward the four percent limit, which gives VA transactions additional flexibility when structured correctly.

Using lender credits to cover VA closing costs

Lender credits offer another way to reduce the cash-to-close requirement. With this option, the lender covers some or all closing costs in exchange for a higher interest rate.

Lender credits can:

• Reduce upfront cash requirements
• Be combined with seller concessions
• Preserve buyer savings

The trade-off is a higher monthly payment. This strategy may work well for buyers who plan to refinance or sell in the future.

How closing costs affect VA offers in today’s market

In today’s market, sellers prioritize certainty and clean transactions. VA offers can remain competitive when closing cost requests are structured reasonably.

Strong VA offers often include:

• Full pre-approval
• Realistic seller concession requests
• Flexible closing timelines
• Clear contract terms

When properly presented, VA loans do not inherently disadvantage sellers and often close as smoothly as conventional loans.

Common misconceptions about VA loan closing costs

Misunderstandings still affect perceptions of VA loans.

Common myths include:

• VA buyers cannot pay closing costs
• Sellers must pay all VA closing costs
• VA loans always cost sellers more
• VA loans are slower or riskier

In reality, VA loans provide clear rules and predictable outcomes when handled by experienced professionals.

Planning for VA loan closing costs as a buyer

Preparation helps avoid last-minute surprises.

Smart planning steps include:

• Reviewing estimated closing costs early
• Discussing concession strategies with your agent
• Comparing lender credit options
• Keeping reserves for flexibility

Working with a lender who understands VA fee rules ensures costs are allocated correctly and transparently.

Planning your VA purchase with confidence

Closing costs do not have to be a barrier to using your VA loan benefit. VA rules limit fees, allow seller concessions, and offer options to reduce cash at closing without sacrificing competitiveness.

Understanding how the buyer, seller, and lender responsibilities interact helps you structure your purchase strategically.

Frequently asked questions: Who pays closing costs on a VA loan