What Are VA Non-Allowable Fees?
A VA loan is a mortgage backed by the Department of Veteran Affairs. The government guarantees loans made by private lending institutions, which gives lenders the flexibility to offer more options and lower rates. VA mortgage loans require no down payments, can provide some assistance with closing costs, and come with lower interest rates than conventional mortgages.
VA loans are special home loans for service-members, veterans, and their families. They're one of the best options for financing a home, but they also have some unique requirements and fees. If you're a homebuyer using a VA mortgage loan, you may wonder what fees are non-allowable. This is a complex question that has several answers. This article will discuss non-allowable VA fees and how they may affect your purchase decision.
VA Non-Allowable Fees Defined
VA non-allowable fees are fees that a lender can't charge when you get a VA home loan. A simple answer to a complex question, right?
The U.S. Department of Veterans Affairs backs VA loans. The VA loan program is committed to providing an affordable home-buying experience for veterans, so it's not surprising that the VA controls what fees veterans must pay at closing.
VA non-allowable fees are costs that the VA has prohibited lenders from charging borrowers in the closing process. Borrowers using a VA loan should not encounter any VA non-allowable items at closing.
When you close on a home loan, the list of fees is pretty long, so it's crucial to know what should and should not be allowed for your loan.
VA Allowable Vs. Non-Allowable Loan Fees
There are strict requirements for what fees the buyer can pay at closing for a VA Loan. There are specific fees that are not allowed to be charged to the buyer, i.e. "non-allowable fees." There are other fees that the buyer is expected to pay, i.e. "allowable fees."
Let's take a look at the most common VA allowable vs. non-allowable fees:
VA Allowable Fees
Here is a list of the VA allowable fees you should be aware of:
- VA funding fee: A one-time fee paid directly to the VA to fund the VA loan program.
- VA appraisal fee: A fee for obtaining a VA-certified appraisal of your future home.
- Credit report fee: A copy of your credit report to evaluate your creditworthiness.
- Origination fee: Most lenders charge 1% of the loan amount to cover their costs.
- Title insurance: A fee for the creation of a new home title
- Recording fee: A fee for the cost of transferring property ownership.
- Any discount points you use: You must pay for any discount points used during the VA loan process.
VA Non-Allowable Loan Fees
- Attorney fees: Real estate attorney fees are not allowed for VA home loans.
- Real estate broker fees: As a buyer with a VA loan, you do not pay for real estate broker fees.
- Agent fees: VA borrowers do not pay real estate agent fees, as these are typically paid by the seller.
- Application fees: Your VA loan lender should not charge you a fee for your loan application.
- Escrow fees: No fees should be associated with setting up an escrow account.
- Rate lock fees: Your lender cannot charge you to lock in your rate.
- Appraisals or inspections ordered by the lender: Any additional appraisals or inspections ordered by your lender are non-allowable fees.
Remember to contact the VA or your lender for assistance if you encounter a non-allowable fee!
Did you know that VA Loans are mortgage loans available exclusively to Veterans and military families? And did you know the benefits the VA Loans offer includes $0 down payments, no private mortgage insurance, relaxed credit requirements, and competitive interest rates?
VA Loan Requirements
You must be a veteran who served on active duty or was honorably discharged from active duty service to qualify for a VA loan. You can also qualify if you're the spouse or surviving spouse of an eligible veteran or member of the armed forces who died while on active duty or as a result of service-connected disabilities.
Remember, Military Home Spot Lending is an approved VA lender specializing in VA Home Loans. Learn more about our VA loans here.