The U.S. Department of Veterans Affairs (VA) offers a mortgage financing program known as VA loans. This is designed to help veterans, active-duty service members, and surviving spouses get financing for a home loan.
When applying for any mortgage, there are additional costs on top of the purchase price of the property. These costs can be complex to figure out for first-time homebuyers, so there are calculators available to help.
A loan closing costs calculator is used to estimate the closing expenses associated with a mortgage loan such as a VA loan. These costs can include appraisal fees, loan origination fees, title and homeowner’s insurance, lawyer’s fees, and property taxes. The calculator takes into account the amount of the loan, the term of the loan, the interest rate, and the purchase price.
This guide will help you understand these costs and also calculate what these expenses might look like for your loan.
Why Use a VA Loan Closing Costs Calculator Table?
A VA loan closing costs calculator is a useful tool for anyone looking into applying for a VA loan. Because, yes, you do pay closing costs with a VA loan.
Although calculators only provide an estimate and not the final closing costs, you can enter the property and loan details and immediately get an idea about the total closing expenses you will be paying if you go through with the loan.
This helps with budgeting, comparing the cost of living in different locations, looking at different properties and loan options, and negotiation. It also helps educate borrowers about the loan process.
💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
How to Calculate Your VA Loan Closing Costs
Whether you are a first-time homebuyer or have been through the process before, it can be a good idea to acquaint yourself in advance with the fees you’ll pay when you get a home mortgage. The following are some of the common costs associated with VA loans:
• VA funding fee: This is a required fee calculated as a percentage of the loan amount. The amount of this fee depends on factors such as the down payment amount and the type of service member applying. Worth noting: This is the one fee that you may be able to roll into the loan vs. pay separately.
Also, some people may be exempt from paying a funding fee, such as those who receive compensation for a service-related disability, among other scenarios.
• Loan origination fee: This is a fee for processing the loan application (it’s charged by the lender, not the VA) and is generally a percentage of the loan amount. With a VA loan, it typically has a maximum and will not exceed 1% of the loan value.
• Discount points: These are upfront payments that can be made to reduce the loan’s interest rate. Each percent of the loan amount is equal to one point.
• Credit report: This is a fee for obtaining a credit report, which is used to determine the borrower’s creditworthiness. Having good credit is just one important part of qualifying for a home loan.
• Appraisal fee: There is a fee for hiring an appraiser, who determines the value of the property being purchased.
• Homeowners insurance: This is to secure the property against damage and losses. Borrowers generally pay the first year upfront.
• Real estate taxes: If there are any unpaid property taxes, some or all may need to be paid at closing.
• State and local taxes: Some states or cities may impose taxes or property transfer fees.
• Title insurance: Title insurance protects against issues with the property’s title and is generally required by lenders.
• Recording fee: This fee covers the cost of recording the mortgage and any related documents with the government.
Worth noting: With VA loans, you can save big because private mortgage insurance (PMI) isn’t required for those putting down less than 20%, as it might be with other kinds of home loans.
💡 Quick Tip: A VA loan can make home buying simple for qualified borrowers. Because the VA guarantees a portion of the loan, you could skip a down payment. Plus, you could qualify for lower interest rates, enjoy lower closing costs, and even bypass mortgage insurance.†
2024 VA Loan Funding Fee Calculator Table
Now that you understand the different fees that may be assessed when you take out a mortgage, take a closer look at what some of these fees look like for a typical VA loan. (Rates may differ for other types of VA loans, such as those for manufactured homes or that are part of the Native American Direct Loan program.)
| Down Payment (%) | Funding Fee (1st Time) | Subsequent Funding Fee | Other Closing Costs |
|---|---|---|---|
| 0-5% | 2.15% | 3.30% | $3,500 to $6,000 |
| 5-10% | 1.50% | 1.5% | $2,500 to $5,000 |
| >10% | 1.25% | 1.25% | $2,000 to $4,000 |
Examples of VA Loan Closing Costs Calculations
Below are a few examples of closing costs for a VA loan in 2023:
Example 1: First-time homebuyer with no down payment
Loan Amount: $250,000
Down Payment: 0% (No down payment)
Funding Fee: 2.15% (First-time user)
Other Closing Costs: $5,000
Closing Costs Calculation:
Funding fee: $250,000 x 2.15% (0.0215) = $5,375
Other closing costs: $5,000
Total closing costs: $5,375 (funding fee) + $5,000 (other closing costs) = $10,375
Example 2: First-time homebuyer with a 5% down payment
Loan amount: $300,000
Down payment: 5% ($15,000)
Funding fee: 1.50% (first-time user)
Other closing costs: $6,500
Closing Costs Calculation:
Funding fee: ($300,000 – $15,000) x 1.50% (0.0165) = $4,275
Other closing costs: $6,500
Total closing costs: $4,275 (funding fee) + $6,500 (other closing costs) = $10,775
Example 3: Subsequent homebuyer with a 15% down payment
Loan amount: $400,000
Down payment: 15% ($60,000)
Funding fee: 1.25% (subsequent user)
Other closing costs: $7,000
Closing Costs Calculation:
Funding fee: ($400,000 – $60,000) x 1.25% = $4,250
Other closing costs: $7,000
Total closing costs: $4,250 (funding fee) + $7,000 (other closing costs) = $11,250
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Reasons to Calculate Your VA Loan Closing Costs First
Calculating VA loan closing costs is beneficial for a few reasons:
1. Financial planning: Calculating closing costs for a VA loan upfront helps with planning finances and budgeting to make sure you have enough money to afford purchasing a home. It prevents unforeseen expenses and reduces stress throughout the buying process.
2. Analyze affordability: Knowing closing costs can help you determine whether you can afford a property.
3. Comparison shopping: Calculating closing expenses also helps with comparing various home mortgage loans so you can choose the terms that work best for you and potentially save money. While VA loans are one option, there are many types of mortgage loan choices that may be a good choice depending on your individual circumstances.
4. Negotiation: Understanding closing costs provides a starting point for negotiation. Certain fees or terms may be negotiable, and having the knowledge of the starting points provides you, the borrower, with the information needed to get the best deal.
5. Avoid surprises: Planning ahead can help prevent unforeseen costs that may arise during the closing process. It also allows you to compare the estimate to the final closing costs to make sure they are all accurate.
Recommended: How Long Does It Take to Close on a House?
Tips on How to Save on Your VA Loan Closing Costs
Here are some tips for how to save on VA loan closing costs:
• Shop around for lenders: Compare closing cost estimates from various lenders by requesting quotations from them all. It’s important to shop around for a mortgage and look into different options to find the best rates and terms.
• Negotiate with the lender: Don’t hesitate to ask for lower fees and discuss terms. Eligible borrowers with good credit may be able to negotiate loan conditions.
• Consider seller concessions: In some cases it may be possible to persuade the seller of the home to cover some of the closing costs. Consult with the real estate agent during the negotiation process about this possibility to reduce costs.
• Utilize VA loan programs and benefits: Take advantage of the benefits offered by the VA loan program. For instance, the VA funding fee can be rolled into the loan amount, and the VA has restrictions on fees which can help keep closing costs down.
• Consider rate options: Evaluate different interest rate options and the impact they have on closing costs. For instance, a higher interest rate may offer lender credits that can be applied to closing costs. If one intends to live in the house for a long time, this may be a good option.
• Read the Closing Disclosure (CD) carefully: The final closing costs are listed in the Closing Disclosure document. It’s important to carefully review this document to make sure there are no errors or unforeseen closing costs.
The Takeaway
VA loan closing costs include the financing fee, credit report fees, appraisal fees, title insurance, and other expenses associated with obtaining a VA loan. It’s important for borrowers to calculate their estimated closing costs in advance to compare loan options, negotiate fees, and prepare themselves financially for buying a home.
It’s also wise to consider a variety of loan options, from the VA or not, to make sure you are getting the right fit for your financial needs.
SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.
FAQ
What is the VA funding fee for 2023?
The VA funding fees for 2023 are, for first use, dependent on your down payment amount: less than 5%, 2.15%; 5% to 10%, 1.5%; and over 10%, 1.25%. After first use, the rates shift to: less than 5%, 3.3%; 5% to 10%, 1.5 %; and move than 10%, 1.25%.
What percentage of closing costs can be included in a VA loan?
There is no specific limit on the percentage of closing costs that can be included in the loan amount, but the VA restricts the types of fees that can be charged. The VA has a “4% rule,” which states that the total allowable closing costs and certain fees paid by the borrower cannot exceed 4% of the loan amount.
What is an example of a VA funding fee?
The VA funding fee is a one-time fee paid by borrowers using a VA loan, and the amount is calculated based on factors such as the loan amount, down payment, and the borrower’s service category. For example, a first-time borrower with a $300,000 loan amount and no down payment may have a funding fee of 2.15%, resulting in a fee of $6,450.
Photo credit: iStock/Ole Schwander
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
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