Learn about what upfront costs to expect with a VA Home Loan.

If you’re a veteran and looking into purchasing a home, one great option is a Veterans Administration (VA) Loan. VA Loans are available for veterans, active duty military personnel, and certain members of the National Guard and reserves. Veterans can receive up to 100% financing of the property value, meaning you may not need a down payment, but what other costs should you be prepared for? Read on to see a breakdown of what costs to consider in your budget if you’re looking into a VA Home Loan.  

VA Home Loans: What Costs to Expect

April 6, 2017

Learn about what upfront costs to expect with a VA Home Loan.

If you’re a veteran and looking to purchase a home, one great option is a Veterans Administration (VA) Loan. VA Loans are available for veterans, active duty military personnel, and certain members of the National Guard and reserves. Veterans can receive up to 100% financing of the property value, meaning you may not need a down payment, but what other costs should you be prepared for? Read on to see a breakdown of what costs to consider in your budget if you’re looking into a VA Home Loan.

1. VA Appraisal Fee: $425

To receive a VA Loan, you must have a VA appraisal inspection. This insures the home is sound and the value is at the purchase price or greater. This ensures that you are paying a fair price for the home. The appraisal fee is due prior to ordering the appraisal and is non-refundable once the appraiser has completed the inspection and appraisal report.

 

2. Independent Home Inspection: $200-$500, depending on size of home

Although not required, it is highly recommended to have a licensed and insured home inspector thoroughly inspect the home before ordering a VA Appraisal. This inspection will be much more thorough than the VA Appraisal, giving you a better understanding of the condition and history of your home to-be. This will give you complete peace of mind and help avoid surprises down the line. This expense will be directly out-of-pocket and not part of your closing costs. 

 

3. VA Funding Fee: varies; based on loan amount and down payment

Unless you are a disabled veteran, this will be a required fee with a VA Loan. This fee allows the VA to offer 100% financing, meaning you can purchase a home without a down payment. Check out this guide from the Department of Veterans Affairs to calculate this one-time fee based on the amount of your loan and down payment. You can choose to finance this fee through your loan or pay it at closing, either by the seller or borrower.

Once you have the above fees factored into your budget, now is a time to consider how you can lower these fees. How is that possible? Through good negotiating! You can ask the seller to help you pay for the closing costs, which includes the fees above. The seller is allowed to pay up to 4% of the purchase price towards the buyers closing costs and pre-paid items. This means if you are buying a $100,000 home, the seller would be able to pay up to $4,000 in closing costs and fees! This saves you quite a bit and is a great way to keep your out-of-pocket costs low.

Have other questions about VA Loans? Reach out to any of our Mortgage Loan Originators with your questions! They can help guide you through the process and answer any questions or concerns you have, from start to finish. Feel free to call our mortgage experts at 256-882-8500 or contact them online today.

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This content is provided for informational and educational purposes only and considered accurate as of the date posted. Views and opinions expressed in comments do not constitute an official endorsement by Redstone Federal Credit Union® or its affiliates. Redstone encourages you to seek professional advice for your personal situation before making any financial decision and is happy to assist you at any of our branch locations.

Must be RFCU® member to obtain or use any product or service. Must open a share savings account to join RFCU. A $5 minimum balance is required to open a share savings account and must be maintained in the share savings account at all times. Age and other restrictions may apply.

Loans subject to credit approval. Annual Percentage Rate (APRs) are determined by an evaluation of applicant credit at account opening.  Fixed APRs are fixed for the life of the loan. Other restrictions may apply. Rates, terms, and conditions are subject to change without notice. RFCU® is an Equal Credit Opportunity Lender. Contact Credit Union for details. Various types of mortgage loan programs and terms are available. VA Funding fee may be required. Must create a separate user name and password to gain access to the mortgage application process.

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