Are you eligible for a VA loan and looking to purchase a home? If so, you may have heard great things about all of the advantages a VA loan can offer to save you money. However, you still can't get away with paying closing costs. They are essential for getting any type of loan, many of which need to be paid by the time you get the keys to the house. Here are some of those closing costs that you can expect to pay for a VA loan.

Origination Fee

Your lender is going to have a variety of different fees that are rolled into your closing costs. One that you cannot get out of paying is the origination fee, which is the money that goes to the lender for processing your loan. This fee is based on how much money you are borrowing, and is typically no more than 1% of the mortgage value. For example, if you have a $200,000 loan, then you will pay $2,000 in closing costs for a 1% origination fee. 

Keep in mind that this fee is based on the total amount of your mortgage, not the cost of your home. If you provide a bigger down payment, you will reduce how much you pay for the origination fee.

VA Funding Fee

There is a small fee that must be paid to the United States Department of Veterans Affairs to help fund this loan program. What makes this fee unique is that you do not have to pay it at the time of the closing. This is one fee that can actually be rolled into the loan amount and paid off over time. However, you will then pay interest on that fee if you decide to pay it in this way. You also have the option to pay for this fee in cash and save money on interest. 

One thing to know about the funding fee is that some people can have it waived if they are a recipient of VA disability compensation. This is compensation that is tax free, and given to anybody injured in the line of duty or has a preexisting condition aggravated by their time serving their country. 

Points

You also have the option to pay for discount points to lower your overall interest rate. These points work just as if you received a non-VA loan. You pay for the points at the time of your home's closing, and you receive a lower interest rate in return.

One thing to keep in mind is that VA loans allow you to pay off your mortgage early without penalty. Make sure you understand the breakeven point on buying these points and that you do not plan to pay off your mortgage before this point. 

Reach out to a company like VA Loan Lending to learn more.