VA Loan Closing Costs and Interest Rates

VAMortgageCenter is here to make the process of obtaining a VA Loan simple and worry-free, while working to save you as much money in the process as possible.

Questions on interest rates and closing closts vary depending on each borrower's unique situation. The questions below answer general questions; however, to the best way to receive a specific answer to your questions is to call us at 1-800-405-6682 or start our simple contact form below to get in touch with a Home Loan Specialist.

VA Loan Rates and Closing Cost Questions

Use the links below to find more information about VA Loan rates and costs. or go back to FAQ's home.

Does running my credit affect my score?

There has been a great deal of debate on this subject. Having a long history of many pulls for various types of credit can lower your score, but over a short period a few pulls for one type of purchase (such as an auto loan or mortgage) should not significantly affect your score. Pulling your own credit does not have an impact on your score.

What does a clean credit history mean?

A clean credit history means that you do not have collections, judgments, late payments or other blemishes on your credit report. You have made all your payments on time and do not have any items on your credit that could negatively affect your approval.

Is the rate on a VA Loan better than any other loan?

Rates on VA Loans change on a daily basis, just like a conventional loan's rates. Due to this fluctuation, it is hard to say if they are better or not. VA loan rates are very competitive with other mortgage products. You can speak with a VA mortgage specialist to determine what rates are available based on your specific factors, such as your credit score.

Does the VA control interest rates?

No, the VA does not control interest rates. The rates are controlled by private investors buying and selling mortgage bonds. They change and differ on a daily basis just like conventional rates.

Is it true that for a VA Loan, Lenders only look at the last 12 months of credit?

NO, a lender looks at your overall credit profile to determine risk. The most recent 12 months are obviously the newest so they may be weighed more heavily than something on your report that occurred 5 years ago, but your entire credit report will be reviewed.

Can you use the credit report I pulled off the internet?

No, to get approved your lender will have to pull your credit report. This is because the lender needs to see it in a standard format to make sure everything is listed properly and to better analyze your credit situation. Additionally, the credit report you may pull will likely be weighed differently than if a mortgage company pulls your credit, because your credit scores will be slightly weighted for mortgage related factors. This is why it’s good to start the process sooner rather than later.

What does it mean when it says the rate is floating?

Floating a rate means your rate is not locked in and can float up and down depending on the market. If you are ready to lock in your rate, let your Home Loan Specialist know, and once you are under contract he or she can discuss current rates with you. The most common reason your Home Loan Specialist floats your interest rate is when you are not yet under contract. A specific property address and contract are generally required before your rate can be locked in.

When can I lock in and what does it cost?

You will not be able to lock in your rate until you have a contract on a property or, in the case of a refinance, until all your paperwork has been returned to your Home Loan Specialist for verification. There isn’t a cost associated with locking in a par rate, if you choose to buy down your rate, then you will have the buy down fee which varies daily based on the rates at that time.

How much will it cost me to buy my rate down?

Depending on the market at the time you want to buy down, buying down your rate can be more expensive one day and less the next. Ask your loan officer for more information on buying down the rate, and he or she can tell you more information based on the market that day.

Why is my APR higher than my actual rate?

The rate reflected on the APR shows the cost of the credit as a yearly rate. This rate is generally higher than the rate stated on your mortgage note because, in addition to the interest rate, the APR includes other costs, such as origination fee, loan discount points, pre-paid interest, and mortgage insurance. APR allows you to compare the total cost of financing your loan among various lenders and is usually the best indicator of total cost.

Are there costs to apply for a VA Loan?

No, we don’t charge any upfront application fees to get the VA Loan process started. For more information related to getting started with your VA Loan, see our step-by-step VA loan guide.

Do VA Loans have closing costs?

Yes, all VA Loans have closing costs. A significant amount of borrowers using their VA loan benefit are able to contract with the seller to have the seller pay all or a portion of the closing costs on the loan. If you are unable to get seller paid closing costs, these fees will have to be paid out of pocket at closing as they can’t be financed into the loan.

What is the difference between closing costs and pre-paid items?

Closing costs are costs associated with originating and closing the loan, such as processing fees, title work, origination fees, title insurance, etc. Pre-paid items are costs associated with setting up your escrow accounts for homeowners insurance and property taxes. Pre-paid items also cover any interest your loan will accrue between closing and your first payment

Can the seller pay my closing costs for me?

Yes, the VA allows the seller to pay all closing costs, and a certain amount of concessions (if you have any) toward your purchase.

Do I get extra benefits for having a service-connected disability?

Yes, having a service-connected disability of 10% or higher provides you with an addition benefit: the funding fee is waived. A funding fee is a percentage of the loan (up to 3.3%) charged by the VA to keep the VA mortgage guarantee program operational.

Can I buy a home with no money out of pocket?

Yes, it’s possible to get into a home with no money down and no money for closing costs. To do this, the seller has to agree to pay all closing costs.

How much of a down payment will I need for a VA Loan?

You do not need a down payment for a VA Loan unless the home you intend to purchase costs more than the county loan limit established by the VA. You can determine the county loan limit in your area here. In most other cases you can get into your home with no money down and often with no money out of pocket. Contact a Home Loan Specialist today to get started on your VA Loan.

The seller is requesting earnest money. How does that work?

Earnest money, also referred to as good faith money, is a dollar amount you deposit with an escrow agency to show the seller that you are serious about purchasing the home. If you decide later not to buy the house, the earnest money may go to the seller for the lost time and effort, but there are also situations where you would get a full refund.

Talk with a VA specialized real estate agent to determine which situations would cause you to forfeit your earnest money deposit. If you are putting down earnest money, make sure that it is the right house for you and you have been approved for financing. Oftentimes if a buyer is able to negotiate the contract in a way that provides for all seller-paid closing costs he can choose to get a refund of his earnest money at closing or put it towards the purchase price.

Is there a pre-payment penalty on a VA Loan?

No, there is no pre-payment penalty on a VA loan. You are allowed to pay off the loan at any time without penalty.

Additional Questions on VA Loan Costs and Credit?

If you have questions on VA Loan costs and rates, or if you want to determine if a VA Home Loan is the best financial decision for you, contact VA Mortgage Center online or call 800-405-6682.

Get Started With Your VA Loan Request

Take the first step in your VA Loan by getting in touch with a Home Loan Specialist.
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