VA Non-Allowable Fees – Who Pays What? VIDEO

VA Non-Allowable Fees – What are They?

VA Non-Allowable Fees

VA Non-Allowable Fees

Arizona VA home loans have a guideline that does not allow veteran to pay certain fees associated with their new Arizona VA Mortgage and/or the purchase transaction itself when a VA loan is being used to finance a home.   The fees that are not allowed to be paid by the Veteran are called “VA Non-Allowable Fees” (meaning the Veteran is Not Allowed to pay for them).   The fees that are included in the VA Non-Allowable Fees category are different depending on whether or not the Arizona VA Mortgage Lender charges a 1% origination fee on the Veterans new VA loan.

How Much are VA Non-Allowable Fees

There are 2 different ways to determine and calculate VA Non-Allowable Fees on a VA purchase loan.  There is a set of fees that the veteran cannot pay if the VA lender is charging a 1% fee and then there is a different set of fees the veteran cannot pay if the VA lender is not charging a 1% origination fee.  Let’s dig in a little deeper:

1. VA Non-Allowable Fees if Lender Charges a 1% Origination Fee:

When a lender charges a 1% origination fee the list of VA Non-Allowable Fees is longer.  The VA wants to limit how much the veteran is paying in closing costs.  If they veteran is already paying a 1% origination fee they are not allowed to pay several other fees as a result.  In contrast as  you will see in the next section, when a lender does not charge a 1% origination fee the list of VA Non-Allowable Fees is shorter due to the fact that the veteran has not come out-of-pocket for a 1% origination fee.  In that case the VA is okay with the veteran paying more of the costs associated with the transaction.

Sample list of VA Non-Allowable Fees when a VA lender charges a 1% origination fee:

  • 2nd appraisal
  • non-appraiser required lender ordered inspections
  • Settlement fee/escrow fee
  • Document prep fee
  • Underwriting fee
  • Processing fee
  • Non up front application fee
  • Truth in lending fee
  • Mortgage broker fee
  • Termite/Pest inspection fee
  • Attorney fees
  • Email fee
  • Photograph fee
  • Postage fees if not a cash out refi or a streamline refi
  • Notary fee
  • Commitment fee
  • Trustee fee
  • Tax Service fee

Typical VA Non-Allowable Fees Total on a Resale transaction when a 1% origination is charged:  +/- $1,400 (this is only an estimate – please check with the VA lender to verify ahead of time)

*these are the most common VA Non-Allowable fees there may be others

2. VA Non-Allowable Fees if Lender Does NOT Charge a 1% Origination Fee:

If the Arizona VA mortgage lender does not charge a 1% origination fee, the VA is okay with the veteran paying more of the costs associated with the transaction.

Sample list of VA Non-Allowable Fees when a VA lender does not charge a 1% origination fee:

  • Termite/Pest Inspection Fee
  • Attorney fee charged as a benefit to the lender
  • Mortgage broker fee
  • Realtor commission
  • Prepayment penalties
  • HUD/FHA Inspection fees for the builder

Typical VA Non-Allowable Fees Total on a Resale transaction when a 1% origination fee is not charged:  +/- $100(this is only an estimate – please check with the VA lender to verify ahead of time)

Typically the only fee that shows up on a resale transaction as a VA Non-Allowable fees when the lender does not charge a 1% origination fee is the termite fee.

NOTE: there is a partial origination fee rule to follow too.  The cost of the VA Non-Allowable Fees and the origination fee cannot exceed 1% of the loan amount.  For example, if the lender charges a .5% origination fee the VA Non-Allowable Fees total cannot exceed .5% of the veterans VA loan amount.

This is a commonly misunderstood concept in real estate and VA lending.  If you have any questions about how VA Non Allowable fees work and who can pay them please contact us.  Team Phone:  602.435.2149   Team Email:  Team@JeremyHouse.com

By Jeremy House
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VA Non Allowable Fee Structure

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Jeremy is the Founder of The HOUSE Team and a Sr. Loan Officer/Branch Manager with PrimeLending. Over the past several years he has ranked in the top 1% of all loan officers nationwide and one of the top 200 loan officers in America. In the mortgage industry, the devil is in the details. Jeremy prides himself on being a student and an expert when it comes to everything mortgage related.

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