The seller typically pays closing costs on a VA loan, not the buyer
With a VA loan, the seller is required to pay most of your closing costs. This is a major difference from conventional mortgages, where the buyer often covers these expenses. The VA loan rules limit what you can be charged and who must pay for what, which protects you from absorbing thousands of dollars in fees at closing.
The seller's obligation to pay closing costs is written into VA lending rules, not just a market practice. If a seller refuses to pay, the deal can fall apart — your lender will not close the loan if the seller has not met this requirement. This means you have leverage in negotiations, and sellers in VA loan markets know this going in.
However, there are specific closing costs the seller cannot be required to pay, and a small number that you may pay yourself. Understanding which costs fall where helps you know what to expect at closing and what to push back on if a seller or lender tries to shift costs to you.
Key Takeaways
- The seller must pay most closing costs on a VA loan, including title insurance, recording fees, transfer taxes, and the lender's title search.
- You cannot be charged a VA funding fee at closing if you are exempt; if you are not exempt, you can roll the funding fee into your loan balance instead of paying it upfront.
- You may pay for a home inspection, appraisal, and credit report yourself, though some lenders cover the appraisal.
- The seller cannot charge you discount points or origination fees; these are lender costs that the seller must cover if they are charged at all.
- If a seller refuses to pay required closing costs, your VA lender will not close the loan, giving you grounds to walk away or renegotiate.
What the seller must pay
The seller pays for title insurance, which protects the lender against claims that someone else owns the property or has a lien on it. The seller also covers the title search, which the title company runs to confirm ownership history. These are standard seller costs in most VA transactions.
Recording fees — the cost to file the deed and mortgage with the county — come from the seller's side. So do transfer taxes, which vary by state and county but can run hundreds or thousands of dollars. The seller also typically pays for the survey if one is ordered, and for any repairs required by the VA appraisal.
If the lender charges discount points (a fee to lower your interest rate) or an origination fee (the lender's processing charge), the seller must cover these, not you. This is a hard VA rule. The seller cannot pass these costs to you, even if you ask them to.
What you may pay yourself
You can be charged for a home inspection, which is optional and separate from the VA appraisal. The inspection is your choice — you order it to learn about the property's condition — so it makes sense that you pay for it. This typically costs $300 to $500 depending on the home's size and your location.
The VA appraisal is required by the VA, but some lenders cover this cost and some charge you. If your lender charges an appraisal fee, you may pay it, though you can ask the seller to cover it as part of closing cost negotiations. The appraisal usually costs $400 to $600.
A credit report is pulled by the lender to check your credit history. You may be charged for this, typically $20 to $50. Some lenders include it in their origination fee, which the seller pays, so ask your lender whether this is a separate charge to you.
The VA funding fee and how to handle it
The VA funding fee is a one-time charge from the Department of Veterans Affairs, not the lender or seller. It funds the VA loan program and is separate from closing costs. The funding fee is not paid to the seller or title company — it goes directly to the VA.
If you are exempt from the funding fee (because you receive VA disability compensation, for example), you pay nothing. If you are not exempt, you have two options: pay the funding fee upfront at closing, or roll it into your loan balance and pay it over time with your mortgage. Rolling it in is common because it spreads the cost across 30 years instead of requiring cash at closing.
The funding fee amount depends on your down payment and whether you have used a VA loan before. For a first-time VA loan with no down payment, the funding fee is 2.3 percent of the loan amount. With a 5 percent down payment, it drops to 1.63 percent. The VA publishes the full fee schedule, and your lender will tell you the exact amount before you lock in your rate.
Costs that cannot be charged to you at all
The VA prohibits lenders from charging you certain fees that are common in conventional mortgages. You cannot be charged a loan origination fee, underwriting fee, processing fee, or document preparation fee. These are lender costs, and the VA considers them part of the lender's normal business expense.
You also cannot be charged for a pest inspection or radon test unless you specifically order one. If the lender or seller requires these, they must pay. Similarly, you cannot be charged for HOA transfer fees or HOA document preparation — the seller covers these if they explore.
If a lender or seller tries to charge you any of these prohibited fees, report it to your VA lender's compliance department or to the Consumer Financial Protection Bureau. These rules are enforced, and lenders know the penalties for breaking them.
Negotiating closing costs with the seller
Because the seller knows they must pay most closing costs, you have room to negotiate. If the seller's asking price is high, you can ask them to cover your appraisal, inspection, or credit report as part of the deal. Some sellers will agree to this to close the sale faster.
If the seller balks at paying required costs, your lender will catch it during the closing disclosure review. The lender will not close the loan if the seller has not met VA requirements, so you do not have to accept a deal where the seller tries to shift costs to you. This is one of the strongest protections VA loans offer.
Put any closing cost agreement in writing as part of your purchase contract. Do not rely on a verbal promise from the seller or real estate agent. Your purchase agreement should specify who pays for the appraisal, inspection, and any other costs beyond the standard seller obligations.
What happens if you cannot pay your share at closing
If you do not have cash for the costs you are responsible for — inspection, appraisal, credit report — talk to your lender about rolling these into your loan or delaying payment. Some lenders will cover the appraisal and let you pay it back as part of your mortgage. Others will let you pay the inspection and credit report after closing.
You cannot borrow the money for closing costs from someone else and hide it from your lender. The lender will ask where your down payment and closing cost funds came from, and they will verify the source. If you borrowed money, the lender may count it as a new debt and reduce how much they will lend you.
The VA does allow the seller to give you a credit toward closing costs, which reduces what you owe at closing. This is different from the seller paying the costs directly — the credit lowers your cash requirement. Ask your real estate agent whether the seller will offer a closing cost credit if you are short on cash.
Frequently Asked Questions
Can I ask the seller to pay my VA funding fee?
No. The VA funding fee is a federal charge that only you can pay — the seller cannot cover it for you. However, you can roll the funding fee into your loan balance instead of paying it upfront, which spreads the cost across your mortgage term.
What if the seller refuses to pay closing costs?
Your VA lender will not close the loan if the seller has not met the VA closing cost requirements. This gives you the right to renegotiate, ask for a credit, or walk away from the deal. The seller knows this, so most will comply rather than lose the sale.
Do I have to pay for a home inspection?
A home inspection is optional and separate from the VA appraisal. If you order one, you pay for it. The VA appraisal is required, but some lenders cover the cost and some charge you — ask your lender upfront.
Can closing costs be rolled into my VA loan?
The seller's closing costs cannot be rolled in — they must be paid at closing. However, your VA funding fee can be rolled into the loan balance. Some lenders may also allow you to roll in your appraisal fee or let you pay it after closing.
What if I find out about a closing cost charge after I sign the purchase contract?
Review your Closing Disclosure form carefully at least three days before closing. If you see a charge you were not told about, contact your lender when ready. If it is a prohibited fee or a cost the seller should pay, the lender must correct it before closing.