A $350,000 VA purchase with nothing down still means writing a check at closing. Not for the down payment, obviously. For everything else.
That’s the part that catches people. VA closing costs on a typical purchase run roughly 2% to 4% of the loan amount once you fold in prepaid taxes and insurance, which on a $350,000 loan is somewhere between $7,000 and $12,000 out of pocket. Some of it is negotiable. Some of it is fixed. A few items you legally cannot be asked to pay.
Here’s how the money actually breaks down, and where you have leverage.
What counts as a closing cost
Closing costs are the fees and prepayments that move a house from “under contract” to “recorded in your name.” Three buckets: money the lender charges to make the loan, money third parties charge to document and insure it, and money you have to put into escrow before the first payment is even due.
That last bucket is the one people underestimate. Prepaid interest, a year of homeowner’s insurance, and a few months of property taxes can add $3,000 to $5,000 by themselves. None of that is profit for anyone. It’s just cash the lender wants on hand.
The line items you’ll see most often
Lender fees
Origination, underwriting, processing, credit report, flood certification. VA caps the origination fee at 1% of the loan amount in most cases, and plenty of lenders now waive it entirely and make their money on the rate instead. A $350,000 loan at a 1% origination charge is $3,500. At zero, it’s zero. Same house, same buyer, $3,500 difference.
Title and settlement
Lender’s title insurance, a title search, and the settlement or escrow fee. In most markets that cluster lands between $1,500 and $2,500 on a mid-priced home, and it swings hard by state. Texas and New York run hot. Parts of the Midwest run cool.
Appraisal, recording, and government charges
The VA appraisal typically costs $600 to $900 depending on the property and region. Recording fees are usually under $200. Transfer taxes are frequently the seller’s responsibility on a VA loan, but that varies by state, so read the contract instead of assuming.
Prepaids and escrow deposits
Prepaid interest from your closing date to the end of the month, the first year of homeowner’s insurance, and two to four months of property taxes to seed the escrow account. On a $350,000 loan at 6.5%, daily interest is about $62. Close on the 22nd and you’re prepaying roughly $560.
The funding fee sits on the same page, but it isn’t a closing cost
People lump it in because it appears on the Closing Disclosure right next to everything else. The VA funding fee is a separate charge, and it’s the biggest single number most veterans see. First use with nothing down is 2.15% of the loan, which works out to $7,525 on a $350,000 purchase. A subsequent use with less than 5% down jumps to 3.3%. Put 10% down and it falls to 1.25%, and veterans with a service-connected disability rating are typically exempt altogether. There’s a full breakdown of who pays which funding fee percentage if you want the exact tier for your situation.
The good news is that the funding fee can be financed into the loan rather than paid in cash. Your VA Loan Certificate of Eligibility is the document that shows which tier you’re in and whether the exemption box is checked, so pull it before you start comparing loan estimates.
What sellers can be asked to cover
For years VA buyers were capped at 4% seller concessions. That cap was eliminated in 2024, which means a seller can now cover all of your allowable closing costs, within whatever limits your particular lender’s investor guidelines impose. In a balanced or soft market, asking for 2% to 3% in seller credits is a normal piece of a VA offer, not an outrageous one. In a bidding war, it’s the first thing you drop.
What seller credits can’t do is fund your down payment (a moot point on a VA loan with no down payment, where the down payment is zero anyway) or pay off your credit cards.
Fees VA doesn’t allow on your side of the table
This is where VA loans beat conventional financing. The VA publishes a list of non-allowable charges that can’t be passed to the veteran buyer. In practice, you generally shouldn’t see these on your half of the settlement statement:
- Document preparation, courier, notary, or “post-closing” admin fees invented by the lender
- Underwriting and processing fees the lender’s own origination charge already covers
- Prepayment penalties of any kind
- Lender’s inspection fees on the property
- Attorney fees for the lender’s own representation (title work is a separate matter)
- Anything the seller agreed to pay in the purchase contract
If one of those appears, ask about it. Lenders occasionally slip a junk fee onto page 2 hoping nobody reads it, and the fix is usually a short phone call. Knowing the full set of VA home loan requirements before you’re under contract makes that conversation a lot easier.
Real numbers on a $350,000 purchase
Nothing down, first use, 6.5% rate, closing on the 22nd. A realistic estimate:
- Origination (0.5%): $1,750
- VA appraisal: $750
- Credit report: $65
- Title search, lender’s policy, settlement fee: $2,100
- Recording: $140
- Prepaid interest (9 days): $560
- First year homeowner’s insurance: $1,750
- Property tax escrow (3 months): $1,050
That totals about $8,165, or 2.3% of the purchase price. Swap in a full 1% origination fee and you’re near $10,000. Pay the funding fee in cash instead of financing it and you cross $17,000, which is why almost everyone rolls it into the loan.
Where the real savings are
You can’t negotiate the appraisal fee down. You can move four other numbers.
Shop at least three lenders on the same day. Lender fees and rates vary more than most buyers expect for identical borrowers. Over time the rate matters more than the fees, and the mechanics of what actually drives your VA mortgage rate quote are worth understanding before you call anyone.
Ask for a lender credit. Taking a rate 0.25% higher in exchange for $3,000 toward closing costs is a fair trade if you expect to move or refinance inside five years.
Time your closing. Settling near the end of the month shrinks prepaid interest. It’s a small lever, but it’s free.
Compare title quotes. You’re allowed to shop for title services in most states, and the spread between two providers on the same property is often $500 or more.
Read page 2 of the Loan Estimate like it’s a contract, because it is
The Loan Estimate has to reach you within three business days of your application. Page 2 lists every closing cost inside three tolerance buckets. Costs in the 0% bucket can’t increase at all. The 10% bucket can move up to 10% in aggregate. The unlimited bucket can shift freely. When the Closing Disclosure arrives three business days before settlement, compare it line by line against the original estimate. If something in the zero-tolerance bucket grew, the lender absorbs the difference, not you.
Two questions are worth asking your loan officer before you sign anything: which of these fees are yours and which belong to third parties, and what happens to my cash to close if the settlement date slips a week. A straight answer to both tells you more about a lender than any rate quote will.