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VA Loan Closing Costs

by Christi G.
(New Braunfels, TX USA)

We have put a contract on a home for the full asking price of 364k. In the contract we asked the seller to pay $7000k of the closing costs, but now I'm finding out that we are going to have to pay about 7 to 7.5% of the purchase price in closing costs.

We really love the home and wished our real estate broker would have told us to make the seller pay more of the closing costs, I'm not sure we want to finance the closing costs since we are already at the top of our budget!

We have 10 days to opt out and I'm not sure the VA lending will even accept us paying so much in closing costs. I thought with a VA loan we would pay little to no closing costs? Please help!

======ANSWER=====

Hello Christi;

I suggest you take a look at this link on VA Loan Closing Costs since I have written a page on this subject already.

Something does not smell right on this deal. I have never heard of a VA loan with such high closing costs.

When you read over the VA guidelines, they have several things in place to make it possible for the Veteran to get into a home with very little closing costs.

Many times veterans may think that their closing costs are covered by the VA mortgage. Actually this is not the case, however with a good Realtor you can normally structure the deal so it works out where you pay little if any closing costs.

If the Veteran is disabled then that is a different story. You want to get to know the VA eligibility requirements to understand how this works.

The loan amount is determined by the purchase price or appraisal whichever is less. Then you can add the funding fee onto the VA loan costs.

If you want your closing costs included in the loan, you have to increase the price of the home by the amount to close, then ask the seller to pay them. I think the maximum amount now is 3% of the sales price. So in your case the seller can pay up to $10,920 of your closing costs.

Keep in mind the home has to appraise for this increased price.

These costs normally run around 3%-5%. With your purchase price so high, I would think you can work a good deal with the seller.

I hope this helps. It is very important that the Realtor have an good understanding of VA loans and how they work.

I wish you the best. Feel free to ask any other questions using this thread.

Kind Regards,

Jeff Ragan



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