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How much are closing costs on a VA loan?
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Buying a home with a VA loan means you won’t need a down payment. But what about closing costs?
In this post, we’ll break down real numbers from a recent Chicago home purchase so you know exactly what to expect at closing and how to prepare.
We'll walk through John's experience.
John's a Navy veteran using a VA loan to buy his first home in Chicago's Jefferson Park neighborhood.
The purchase price was $600,000. John put $0 down and financed his VA funding fee.
His story gives a detailed look at the actual costs and process from pre-approval to closing.
NewCastle Home Loans offers VA loans in Florida, Illinois, Indiana, and Tennessee.
What are typical closing costs on a VA loan?
Typical VA loan closing costs range from 2% to 5% of your loan amount.
But that's a wide range ($12,000–$30,000) for a $600,000 home.
For more transparent budgeting, break closing costs into three categories:
- VA Funding Fee (paid to the VA)
- Loan Origination Fee (paid to the lender)
- Itemized Allowable Fees (paid to third-party providers)
Understanding how each cost works can help you prepare and shop smarter for your VA loan.
How much is the VA Funding Fee?
The VA funding fee is typically 2.15% of your loan amount if you're a first-time VA homebuyer with no down payment.
This one-time payment goes directly to the Department of Veterans Affairs. It supports the VA loan program, reducing the cost to taxpayers. You can pay the funding fee upfront or roll it into your loan, as most veterans choose to do.
John's base loan amount was $600,000. As a first-time buyer with 0% down, his VA funding fee came out to $12,900 (2.15%).
Instead of paying this in cash, John chose to finance it into his loan. That brought his total loan amount to $612,900.
Rolling it into the loan amount gave him the flexibility to use his savings for moving costs and home improvements.
How much is the lender's Loan Origination Fee?
The lender's Loan Origination Fee can be up to 1% of your loan amount, as allowed by the VA, covering processing and underwriting expenses.
Fees can vary significantly among lenders. On a $600,000 loan, a full 1% fee would cost $6,000. However, NewCastle Home Loans charged John a flat fee of just $1,195, saving him nearly $4,800 compared to lenders who charge the full 1%.
When comparing VA lenders, don't just focus on the rate. Look at fees, too.
John said he chose NewCastle because we explained everything upfront.
There were no surprises, just a fair deal and fast answers when he had questions.
A local mortgage lender with VA loan expertise gives you an edge, especially when you're negotiating seller-paid closing costs.
We know what's common in your market, what fees the VA allows, and how to structure your offer to reduce your out-of-pocket expenses. You’ll avoid delays, get clear answers fast, and close with confidence.
How much are the allowable closing fees?
Allowable closing fees range from $4,800 to $16,100 on a VA home purchase, depending on the purchase price and the property type you're buying. These fees cover essential third-party services required to complete your home purchase.
The VA sets strict guidelines ensuring the charges are reasonable and customary for your local area.
Because these fees are regulated, they remain consistent among lenders.
VA Allowable Closing Fee Range
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VA Allowable Closing Fees |
Fee Range |
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$550–$800 |
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Credit Report Fee |
$82–$160 |
|
Pest Inspection |
$100–$400 |
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$1,500–$4,000 |
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Recording Fees |
$100–$250 |
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$1,500–$4,500 |
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$500–$3,000 |
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$500–$3,000 |
In John's case, his itemized third-party fees totaled $13,647.
He paid for his appraisal, attorney, credit report, title insurance, and prepaid expenses like taxes and insurance.
These fees were reasonable for a $600,000 home in Cook County.
How much cash will I need to close in Chicago?
With a VA loan, your cash to close could be as low as $0 if the seller pays your closing costs. Otherwise, you'll pay the Loan Origination Fee and third-party fees upfront at closing.
Here's a look at what John paid:
VA Closing Costs in Chicago
| Closing Costs | Cash to Close | |||||
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VA Funding Fee: ($12,900 Added to Loan) |
$0.00 |
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Loan Origination Fee (Paid to NewCastle) |
$1,195 |
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Third-Party Fees (Paid to service providers) |
$13,647 |
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Appraisal: $550 |
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Credit Report: $82 |
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Pest Inspection: $100 |
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Title Charges: $3,163 |
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Real Estate Attorney: $500 |
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Cook County Recording Fees: $210 |
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Chicago Transfer Tax: $4,500 |
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Homeowner's Insurance: $2,250 |
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Insurance Escrow: $375 |
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Property Tax Escrow: $1,917 |
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| Total Estimated Cash to Close | $14,842 | |||||
John used funds from his savings and a small bonus from work to cover his closing costs.
He said knowing the exact numbers ahead of time made it easier to plan and feel confident going into closing day.
NewCastle Home Loans keeps costs low by cutting out layers of overhead. No call centers, no middlemen, no bloated corporate structure.
That’s how we offer lower rates and a low flat loan origination fee, unlike big banks and national online lenders that often charge more to cover their expenses.
Lower rates mean a lower monthly payment and thousands saved over the life of your loan, money you can use for home updates, savings, or your next move.
How much can the seller pay toward my VA loan closing costs?
The VA allows the seller to pay up to 100% of your closing costs, and even more in some cases.
These seller contributions can cover fees like your title insurance, transfer taxes, and even prepaid costs such as property taxes or insurance. They help reduce or eliminate your out-of-pocket expenses at closing.
In some markets, sellers may be willing to offer credits to help close the deal.
John made an offer on a competitive property, so he didn't ask for seller credits.
But in a slower market, you could negotiate to have the seller pay part or all of your closing costs.
Negotiating seller credits can be a powerful tool, especially if you're short on cash or want to keep more in savings. For a deeper dive into how seller concessions work on VA loans, check out our complete guide: VA Seller Concessions & Credits
How does NewCastle make the closing process easier?
NewCastle simplifies closings with a dedicated local team and clear, structured plans. Unlike big banks, you work with Chicago-based experts who know Cook County real estate inside and out.
John said he appreciated working with one team from start to finish.
He received his pre-approval in minutes and had an accurate estimate of his closing costs before making an offer.
Our online dashboard kept everything organized and moving forward.
We start with transparent, detailed cost estimates. Then we give you a clear closing timeline, reducing stress and ensuring you always know your next step. You'll get expert answers fast, with no call centers or runaround.
Our goal is simple: make your VA loan experience smooth, predictable, and cost-effective.
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