Va Loan Seller Pays Closing Costs

The funding fee varies from 1.25 percent to 3.3 percent of the loan amount. The VA allows sellers to pay closing costs but doesn’t require them to. So, the buyer might need money for closing costs.

 · A VA buyer can ask a home seller to pay all of their loan-related closing costs and up to 4% of the purchase price to cover other expenses. Whether the seller will part with a dime for these needs is always a matter of careful negotiation.

For cash-strapped home buyers, asking the seller to help pay closing costs could be an ideal solution. Seller-paid closing costs or seller concessions are money paid toward the closing on your behalf.

The seller can pay your non-allowable closing costs, which is considered a seller concession, and is limited to 4 percent of the sales price of the home. Learn more about VA seller concessions. The buyer’s real estate agent can pay some closing costs in the form of a credit at the closing table.

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 · VA allows the seller to pay all “customary” closing costs for the buyer. This helps a buyer. Customary closing costs do not include the pre-paids mentioned before which include insurance, escrow set up, and interim interest, but, VA allows an additional 4% of the purchase price to be paid by the seller for these AND other permitted items!

Like every mortgage, the VA loan comes with closing costs and fees. VA loan closing costs average anywhere from 3 to 5 percent of the loan amount, but can vary significantly depending on where you’re buying, the lender you’re working with, seller concessions and more.

How seller concessions work. Due to increasing the purchase price by $5,000, the seller can still net their target amount of $200,000. It helps the buyer, as they end up needing $5,000 less out-of-pocket at closing. Again, the buyer is essentially financing the $5,000 into the amount borrowed for their loan.

How much can a seller pay in closing costs on a VA loan? Unfortunately, there is a myth passed on by many lenders that the maximum VA will allow a seller to pay is 4% towards closing costs, but today we will “bust” that myth and dive into the details.