If you're a veteran buying a home, you might be wondering what VA seller concessions are and how they can help you. Simply put, these are contributions the seller makes toward your closing costs, which can save you thousands of dollars when buying a home. With VA loans, sellers can contribute up to 4% of the home's price toward certain expenses, plus they can pay for all your standard closing costs without any limit. This guide breaks down everything you need to know when it comes to VA seller concessions.

Explore current VA loan rates with closing cost estimates or learn more about VA loan programs to understand total costs. Ready to start? Get started on your VA loan with expert guidance on seller concessions.

What Are VA Seller Concessions?

Think of VA seller concessions as money the seller gives you to help with your home purchase expenses. When you buy a home, there are many costs beyond just the price of the house - things like loan fees, inspections, and prepaid taxes. With a VA loan, the seller can help pay for these expenses, which means less money out of your pocket at closing.

VA Seller Concessions Overview

How VA Loans Compare to Other Loan Types

Here's the great news for veterans: VA loans have some of the best seller concession rules:

VA Loans: Sellers can pay up to 4% of the home price toward certain costs, PLUS all your standard closing costs (with no limit!)
Conventional Loans: Sellers can contribute 3-9% depending on your down payment
FHA Loans: Sellers can contribute up to 6% of the home price
USDA Loans: Sellers can contribute up to 6% of the home price

The big difference? With VA loans, sellers can pay for all your normal closing costs without any cap, and then still contribute an additional 4% for other expenses.

Understanding the 4% Rule

Here's where it gets interesting. The VA has a "4% rule" for seller concessions, but it's often misunderstood. Sellers can contribute up to 4% of the home's purchase price toward certain expenses (we'll explain which ones below). But here's the key: sellers can ALSO pay for all your standard closing costs without any limit - these don't count toward the 4%.

What Counts Toward the 4% Limit

These items count toward the 4% cap:

Paying off your debts (like credit cards or car loans)
Prepaying your property taxes and homeowners insurance beyond what's required
The VA funding fee (a one-time fee that helps fund the VA loan program)
Buying "discount points" to lower your interest rate (if buying more than 2 points)
Paying for appliances or other personal property

What Doesn't Count Toward the 4% Limit (Good News!)

Sellers can pay ALL of these standard closing costs without any limit:

Loan origination fees (what the lender charges to process your loan)
Title insurance and title company fees
Recording fees (government fees to record the sale)
Attorney fees
Home appraisal and inspection fees
Pest inspection costs
Survey fees (if needed)
Any fees that veterans aren't allowed to pay (called "non-allowable fees")

Fees Veterans Can't Pay (Non-Allowable Fees)

Here's something unique about VA loans: there are certain fees that veterans are legally prohibited from paying. These are called "non-allowable fees," and someone else (usually the seller) must pay them. This rule exists to protect veterans from excessive or unnecessary charges.

Common Non-Allowable Fees

As a veteran, you cannot be charged for:

Attorney fees (except for title-related work)
Real estate agent commissions or brokerage fees
Document preparation fees (the lender's paperwork costs)
Postage, courier, or delivery fees
Notary fees (in most cases)
Processing or underwriting fees beyond the 1% origination fee
Application fees
Tax service fees (fees to monitor your property tax payments)
Fees for creating payment schedules

Who Pays VA Non-Allowable Fees?

When veterans can't pay these fees:

Seller (most common)
Lender (may absorb for competitive advantage)
Real Estate Agent (from commission)
Third Party (builder, employer, etc.)

What Are Typical VA Loan Closing Costs?

Let's talk real numbers. VA loan closing costs typically range from 3% to 5% of your loan amount, though this can vary based on your location and specific situation. The good news? Veterans often pay less at closing than buyers using other loan types.

Typical Closing Cost Ranges (2025)

Based on current data, here's what you might expect:

For a $200,000 loan: $6,000 to $10,000 in total closing costs
For a $350,000 loan: $10,500 to $17,500 in total closing costs
For a $500,000 loan: $15,000 to $25,000 in total closing costs

Remember: Many of these costs can be paid by the seller!

If you're refinancing instead of purchasing, explore the VA Cash-Out Refinance to access your home equity while potentially reducing closing costs.

Why VA Closing Costs Are Often Lower

Yes, VA loans do have closing costs, but here's why they're often more affordable:

No mortgage insurance: Unlike FHA or conventional loans with less than 20% down, VA loans never require mortgage insurance
Seller can pay: The seller can cover all your standard closing costs plus up to 4% extra
Fee limits: The VA limits what lenders can charge you (1% origination fee maximum)
No prepayment penalties: You can pay off your loan early without any fees

Who Pays What at Closing?

With VA loans, understanding who can pay for what helps you negotiate better. Here's the breakdown:

What You (The Veteran) Can Pay

You're allowed to pay for these items:

VA funding fee (unless you're exempt - more on this later)
Loan origination fee (remember, capped at 1%)
Discount points (if you want to buy down your interest rate)
Credit report fee
Home appraisal
Title insurance for yourself
Recording fees (in most states)
Survey costs (if needed)
Homeowners insurance
Property taxes
HOA fees

What Sellers Often Pay

Sellers commonly cover:

All those "non-allowable" fees you can't pay
Title insurance for the lender
Escrow and settlement company fees
Transfer taxes (fees to record the sale with the county)
Real estate agent commissions
Home warranty (this is negotiable)
Termite inspection
Well and septic inspections (for rural properties)

How to Get Your Closing Costs Covered

While the VA loan itself doesn't pay your closing costs, there are several ways to avoid paying them out of pocket:

Your Options for Covering Costs

Ask the seller to pay - They can cover all standard closing costs plus up to 4% extra
Get lender credits - Accept a slightly higher interest rate in exchange for the lender paying some costs
Roll the funding fee into your loan - You don't have to pay this upfront
Use gift money - Family members can help with closing costs
Check for assistance programs - Many states and employers offer help for veterans
Look for local grants - Some cities and counties have special programs for veteran homebuyers

Can You Roll Closing Costs Into Your Loan?

Generally, you can't add closing costs to your loan amount, but there are exceptions:

VA funding fee - This can always be added to your loan
Energy improvements - Costs for making the home more energy-efficient can be financed
When refinancing - If you're doing a VA streamline refinance (IRRRL), you can include all closing costs in the new loan

VA Loan Seller Contribution Limits by State

While the 4% VA seller contribution limits are nationwide, state-specific costs affect strategies:

High-Cost States

In states like California, New York, and Hawaii:

Higher transfer taxes increase seller costs
Attorney fees more common
Recording fees substantial
Strategy: Negotiate percentage of non-allowables

Low-Cost States

In states like Texas, Florida, and Arizona:

Lower overall closing costs
Fewer non-allowable fees
Strategy: Focus on maximizing 4% concession

California VA Seller Concessions

In California markets like Los Angeles, San Francisco, and San Diego:

Transfer taxes vary by county
Title insurance costs higher
Escrow fees substantial
Natural hazard disclosures required

Remember: Closing costs vary significantly by state and locality. Always request a detailed Good Faith Estimate (GFE) from your lender and work with an experienced VA loan specialist to maximize your seller concession strategy in your specific market.

Understanding the VA Funding Fee

The VA funding fee is a one-time payment that helps keep the VA loan program running for future veterans. It's usually your biggest closing cost, but there's good news: you can roll it into your loan or have the seller pay it.

VA Funding Fee Rates for 2025

First-Time VA Loan Users:

No down payment: 2.15% of loan amount
5% to 9.99% down payment: 1.5% of loan amount
10% or more down payment: 1.25% of loan amount

Using Your VA Loan Again:

No down payment: 3.3% of loan amount
5% to 9.99% down payment: 1.5% of loan amount
10% or more down payment: 1.25% of loan amount

Refinancing:

VA Streamline Refinance (IRRRL): 0.5% of loan amount
Cash-Out Refinance: 2.3% (first use) or 3.3% (subsequent use)

You May Not Have to Pay the Funding Fee

Many veterans are exempt from the funding fee. You don't have to pay it if you:

Receive VA disability compensation for a service-connected disability
Are eligible for disability compensation but receive retirement pay instead
Have been awarded the Purple Heart
Are the surviving spouse of a veteran who died in service or from a service-connected disability

If you think you might be exempt, check with the VA before closing - this can save you thousands!

Can the Seller Pay Your Funding Fee?

Yes! The seller can pay your funding fee, but it counts toward that 4% limit we discussed. Here's a simple example:

Example for a $300,000 home:

Your funding fee (2.15%): $6,450
Maximum 4% seller can contribute: $12,000
After paying your funding fee, seller can still contribute: $5,550 toward other expenses

This is why it's important to negotiate wisely!

The 1% Rule for Lender Fees

Here's another way VA loans protect you: lenders can only charge you up to 1% of your loan amount as an origination fee. This single fee must cover all their processing costs.

What This Means for You

If you're borrowing $300,000:

Maximum origination fee: $3,000 (1%)
This covers everything the lender does to process your loan
No hidden fees can be added on top

Lenders Can't Overcharge You

If a lender charges the 1% origination fee, they cannot also charge you for:

Application fees
Processing fees
Underwriting fees
Document preparation
Administrative fees
Any other "junk fees"

This keeps things simple and transparent!

Smart Strategies to Minimize Your Out-of-Pocket Costs

Yes, veterans do pay some closing costs, but here are proven strategies to keep more money in your pocket:

Strategy 1: Maximize Seller Contributions

When making an offer, ask the seller to pay:

The full 4% concession allowed
All your non-allowable fees
A home warranty (usually $400-$800)
Your first year of HOA fees
Prepaid taxes and insurance

Strategy 2: Consider Lender Credits

You can accept a slightly higher interest rate (usually 0.25% to 0.5% higher) in exchange for the lender paying some or all of your closing costs. Run the numbers to see if this makes sense for your situation.

Strategy 3: Look for Assistance Programs

Many programs can help with closing costs:

State programs: Many states have special loan programs for veterans
County/city grants: Local governments often offer closing cost assistance
Nonprofit organizations: Groups like Operation Homefront can help
Employer benefits: Some employers offer homebuying assistance
VA grants: In certain situations, the VA offers additional help

What About Taking Over Someone's VA Loan?

VA loans can be assumed (taken over) by qualified buyers, including both veterans and non-veterans. This is established in the VA Lender's Handbook (PAM 26-7) and subsequent VA circulars.

Who Can Assume a VA Loan

Both veterans and non-veterans may assume a VA loan if they:

Meet the loan servicer's credit and income requirements
Agree to occupy the property as their primary residence
Obtain approval from both the lender and VA

Note: When a non-veteran assumes a VA loan, the original veteran's entitlement remains with the loan until it's paid off (VA Circular 26-24-9).

Costs to Assume a VA Loan

Per VA fee schedules, assumption costs include:

VA funding fee: 0.5% of the remaining loan balance
Processing fee: $300 to $1,200 (varies by lender)
Credit report: $50 to $100
Title work: $200 to $500
Recording fees: $50 to $200
Total cost: Typically under $5,000

Benefits of Loan Assumption

Lower closing costs compared to obtaining a new loan
Retention of the original loan's interest rate
No appraisal requirement per VA guidelines
Expedited processing timeline
Available to qualified veterans and non-veterans alike

How to Negotiate with Sellers

Getting sellers to pay your closing costs requires the right approach. Here's how to do it effectively:

Know Your Market

When homes aren't selling quickly (Buyer's Market):

Ask for the full 4% concession plus all non-allowable fees
Request a home warranty
Ask for repair credits
Negotiate for prepaid taxes and insurance

When homes sell fast (Seller's Market):

Focus on just the non-allowable fees
Make a strong, competitive offer
Offer a quick closing (30 days or less)
Keep inspection requests minimal

Tips for Successful Negotiation

Help the listing agent understand VA loans - Many don't know sellers can pay more with VA
Emphasize that VA loans are government-backed - They're actually very reliable
Show the math - Demonstrate the seller nets the same as with other offers
Bundle your requests - Ask for everything at once rather than piecemeal
Time it right - Sellers may be more motivated at month's end

Common Mistakes to Avoid

Don't let these mistakes cost you money:

Mistake 1: Paying Fees You Shouldn't

The Problem: Accidentally paying non-allowable fees that veterans can't legally pay The Solution: Always review your closing statement carefully - if you see fees like "document prep" or "processing" charged to you, speak up!

Mistake 2: Not Asking for Enough from the Seller

The Problem: Only asking for some closing costs instead of the maximum allowed The Solution: Work with an agent who knows VA loans - they'll help you ask for the full 4% plus all non-allowable fees

Mistake 3: Funding Fee Surprises

The Problem: Not realizing you're exempt or forgetting the fee is higher for second-time users The Solution: Check your exemption status with the VA before making an offer - you might save thousands!

Mistake 4: Picking the Wrong Lender

The Problem: Choosing a lender who doesn't understand VA loans or charges hidden fees The Solution: Get quotes from at least 3 VA-approved lenders and compare their fees carefully

Special Situations and Tips

If You're a First-Time Homebuyer

Always ask for maximum seller concessions - you have nothing to lose
Check if your state has first-time buyer programs for veterans
Roll the funding fee into your loan so you don't need cash upfront
Factor closing costs into your offer strategy from the start

If You're Moving Due to Military Orders (PCS)

Mention your PCS in negotiations - sellers often sympathize with military moves
Use your BAH (Basic Allowance for Housing) to qualify for the loan
Keep your TLA/TLE (temporary lodging) documentation handy
Remember SCRA protections if you need to break a lease

If You're Keeping Your Current Home as a Rental

Budget for closing costs on both properties
Understand you must occupy the new home as your primary residence
Don't count on rental income immediately - plan for vacancy
Keep cash reserves for both properties

State-Specific VA Closing Cost Considerations

California VA Closing Costs

In California markets:

Northern California (San Francisco, Sacramento):

Higher transfer taxes in some counties
Extensive title insurance costs
Earthquake insurance considerations
Natural hazard disclosure fees

Southern California (Los Angeles, San Diego):

Mello-Roos assessments
HOA transfer fees common
Higher escrow costs
Supplemental tax bills

Central Valley (Fresno, Bakersfield):

Lower overall closing costs
Fewer non-allowable fees
Agricultural disclosures
Well/septic inspections

Your Step-by-Step Game Plan

Before You Start Shopping

Get pre-approved - This shows you're serious and tells you what you can afford
Check if you're exempt from the funding fee - Could save you thousands
Research typical closing costs in your area - Knowledge is power in negotiations
Find a real estate agent who knows VA loans - This is crucial for good negotiations
Shop around with at least 3 lenders - Don't take the first offer

When You're Under Contract

Review the fee estimate immediately - Don't wait until closing to find surprises
If the home appraises high, ask for more credits - Use that equity to your advantage
Get repairs covered through seller concessions - Save your cash
Watch those lender fees - Make sure they're not over 1%
Double-check you're not being charged non-allowable fees

At the Closing Table

Read every line of your Closing Disclosure - This is your final chance to catch errors
Make sure all seller credits were applied - They sometimes "forget"
Verify you're not paying any non-allowable fees - Speak up if you see them
Check that your funding fee is correct - Especially if you're exempt
Keep all documents for tax purposes - You might be able to deduct some costs

How SRK CAPITAL Helps Veterans Save

At SRK CAPITAL, we're VA loan specialists who know exactly how to minimize your closing costs.

What We Do for You

Analyze every fee to make sure you're not overpaying
Create a negotiation strategy to get maximum seller contributions
Compare our rates with other lenders - we're confident we'll win
Give you upfront estimates so there are no surprises
Protect you from being charged fees you shouldn't pay

Why Veterans Choose Us

We actually understand VA loan rules (many lenders don't)
Our rates are competitive with minimal fees
No hidden costs - everything is transparent
We close loans fast (important for military moves)
We're veteran advocates who fight for your interests

Ready to Get Started?

Our team will:

Calculate exactly how much sellers can contribute to your purchase
Identify every fee you shouldn't be paying
Help structure your offer for maximum savings
Guide you through negotiations
Make sure everything is correct at closing

The Bottom Line

Now you understand how VA seller concessions work and how to use them to your advantage. Remember the key points:

Sellers can pay ALL your standard closing costs (no limit!)
Plus they can contribute up to 4% of the home price for other expenses
You can't be charged certain "non-allowable" fees - ever
The VA funding fee can be rolled into your loan
Many veterans are exempt from the funding fee entirely

The difference between knowing these rules and not knowing them can mean thousands of dollars in your pocket.

Ready to Buy Your Home?

Check today's VA rates to see your potential payment with closing costs included. Learn more about how to apply for a VA loan with maximum seller concessions.

Want to start your home purchase with an expert who knows how to minimize your costs? Apply now or connect with our team to create your personalized closing cost strategy.

At SRK CAPITAL, we make sure veterans get every benefit they've earned. Let's get you into your new home with the least amount of cash out of pocket possible.

VA Seller Concessions: Complete Guide to VA Loan Closing Costs and Seller Credits