VA Loan Closing Costs in Florida - How Much Are They And Who Pays Them?
Florida is a state that provides military service members, eligible veterans, and qualifying surviving spouses with the opportunity to acquire a new home through VA loans without the need for a down payment.
However, it's important to note that closing a VA loan in Florida may still involve certain expenses that you should be mindful of during the home buying journey.
In Florida, you should expect closing costs to be 3% – 6% of the total value of the loan. Fortunately, our VA loan program offers flexibility by allowing you to roll most of these costs into your total loan amount.
Now, let's delve into the specific closing costs you should keep an eye on when it comes to obtaining a VA loan in the beautiful state of Florida.
What Are VA Loan Closing Costs?
When you opt for a mortgage to finance your home purchase in Florida, it's inevitable to encounter closing costs. In essence, these closing costs refer to the fees paid to the lender for their assistance in facilitating your loan.
The term "closing costs" encompasses a wide range of fees that are part of the closing process, including the appraisal of your prospective home and the title search.
For VA loans, specifically tailored to meet the needs of military service members and veterans, there are additional fees unique to this type of mortgage. One such fee is the VA funding fee, which we'll explore further in the following section.
During the mortgage closing, which marks the final stages of your home loan process, you will be required to pay the closing costs.
It's important to note that while most mortgages necessitate a down payment, VA-insured mortgages in Florida typically do not require one.
Hence, when attending the mortgage closing, you will need to bring any applicable closing costs while being relieved of the burden of a down payment.
How Are VA Loan Closing Costs Different?
In the realm of VA loans, closing costs differ from those associated with traditional mortgage loans. Here's where the closing costs for VA loans in Florida deviate from the conventional home buying process.
With a VA loan, there are specific fees that the lender cannot demand you to pay, referred to as non-allowable fees. These fees include prepayment penalties, settlement charges, and attorney fees imposed by the lender.
In contrast, when utilizing other types of mortgages, such as conventional loans, you may be obligated to cover attorney fees from the lender and settlement charges. However, by opting for a VA loan in Florida, you have the advantage of bypassing these expenses.
Nevertheless, there are certain allowable fees that may still be required. These encompass the VA funding fee, loan origination fees, recording fees, credit report fees, discount points, title insurance, and other associated closing fees.
Limited Origination Fee
Lenders typically impose a mortgage origination fee to cover the costs associated with underwriting and processing the loan. However, when utilizing a VA loan in Florida, there are specific limits on the fees that lenders can levy.
For VA borrowers, the origination fee charged by lenders cannot exceed 1% of the total loan amount. Generally, mortgage loan origination fees tend to range from 0.5% to 1% of the total loan amount, which aligns with what you might encounter with other types of mortgage loans.
VA Funding Fee
In the realm of VA loans, the funding fee stands as a distinct cost that arises when obtaining such a loan. This fee is a one-time payment made to the Department of Veterans Affairs (VA) and serves the purpose of sustaining the VA loan program.
The exact amount of the funding fee is contingent upon the type of mortgage being sought (home purchase or refinance), the number of times the VA loan benefit has been utilized, and the down payment percentage applied to the home purchase price.
The funding fee is calculated as a percentage of the loan amount, meaning that a larger down payment translates to a smaller funding fee.
For instance, let's consider a scenario where you make a down payment of less than 5% on your initial home purchase utilizing a VA loan.
In this case, the funding fee would amount to 2.15% of the total loan amount. However, if you make a down payment of 10% or more, the funding fee would decrease to 1.25%.
Nevertheless, there are specific circumstances in which you may be exempt from paying the funding fee entirely. You are not required to pay the funding fee if you:
Receive or are eligible to receive VA compensation for a service-related disability.
Are the surviving spouse of a veteran who died in service or as a result of a service-related disability.
- Are the recipient of the Purple Heart.
If you are uncertain about your eligibility for a VA funding fee waiver, it is advisable to consult with your mortgage lender, as they can verify this with the VA on your behalf.
VA Appraisal Fee
In the process of purchasing a home, it is customary to encounter an appraisal fee. However, when opting for a VA loan in Florida, there is a specialized VA appraisal fee to be aware of.
For a VA appraisal fee, it is reasonable to anticipate a cost ranging from $425 to $875. This fee will be incorporated into the overall closing costs associated with your VA loan.
Mortgage discount points can be utilized with various types of home loans, including VA loans. If you decide to purchase discount points, you will be responsible for covering the associated costs during the closing process.
Determining whether the upfront cost of discount points is beneficial for your specific situation requires careful assessment.
How much are VA loan closing costs?
When it comes to obtaining a VA loan in Florida, understanding the associated closing costs is crucial. While the exact amount you'll pay will depend on the specifics of your loan and the chosen property, it's important to have a general idea of what to expect.
In this blog section, we'll delve into the essence of VA loan closing costs in Florida, highlighting the typical range and factors that influence them.
Calculating VA Loan Closing Costs
VA loan closing costs in Florida are typically presented as a percentage of the total loan value. On average, homebuyers can anticipate closing costs ranging from 3% to 6% of the loan amount.
Keep in mind that this range is an estimation and can vary depending on factors such as the property's purchase price and the specific details of your loan.
Factors Influencing Closing Costs
Property Value - The value of the property you choose plays a significant role in determining closing costs. As the property's value increases, it's likely that the closing costs will rise proportionally.
Loan Amount - Since closing costs are often calculated as a percentage of the loan amount, the size of your loan will impact the overall closing costs. A larger loan amount generally results in higher closing costs.
Appraisal and Inspection - The cost of the appraisal and inspection, which are essential steps in the home buying process, can contribute to the closing costs. These expenses help determine the value and condition of the property.
- VA Funding Fee - As mentioned earlier, the VA funding fee is a unique cost associated with VA loans. The amount of the funding fee depends on factors such as the type of mortgage (purchase or refinance), down payment percentage, and previous use of the VA loan benefit.
Who pays closing costs on a VA loan?
When utilizing a VA loan in Florida, the distribution of closing costs among the buyer, seller, and lender follows specific guidelines. It's important to understand these dynamics while keeping the essence of the message intact.
Here's the reworded version specific to Florida.
In Florida, when utilizing a VA loan, the allocation of closing costs involves the buyer, seller, and lender. Each party assumes different responsibilities. The seller is prohibited from paying more than 4% of the total home loan amount in closing costs.
However, the seller is typically responsible for commissions for both buyer and seller real estate agents, as well as any brokerage fee. In certain cases, the seller may also cover expenses for the termite inspection and well-water inspection.
As the buyer in Florida, you will be responsible for paying various closing costs, including the VA funding fee, loan origination fee, loan discount points, VA appraisal fee, title insurance, and more.
However, there is an opportunity to negotiate seller concessions. This allows you to request that the seller covers some of your closing costs, such as property taxes, title fees, or even a portion or the entirety of the funding fee. Additionally, the lender typically covers some customary closing costs, such as attorney's fees.
To ensure affordability for homebuyers in Florida, the VA sets limits on the costs they may face. For instance, a limited origination fee is in place to help keep your overall costs at a manageable level.
Can you roll closing costs into a VA loan?
It's understandable if you don't have the immediate funds to cover all your closing costs and fees in cash during the closing of your VA loan in Florida. Fortunately, the VA loan program offers flexibility by allowing you to roll some of these costs into your total loan amount.
One significant aspect is the ability to include the funding fee in your overall mortgage amount. Although this may result in paying more in interest over the loan term, it can help you secure a home without the need for upfront cash payment.
While not all closing costs can be rolled into the loan, you may still have the opportunity to receive concessions from the seller or lender. These concessions can help reduce the upfront cash costs, making it more manageable for you during the home buying process.
The Bottom Line
For veterans in Florida, leveraging the VA loan benefit presents a valuable opportunity to expedite the realization of their homeownership dreams.
Rather than having to wait and accumulate a substantial down payment, the VA loan allows you to establish roots in a home swiftly. This is why the VA loan stands as one of the most cherished benefits of military service.
If you're ready to embark on your home search journey in Florida, take the first step by applying for a VA loan with MakeFloridaYourHome® today. This will set you on the path towards turning your homeownership aspirations into a reality.
With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.
About Author - Phil Ganz
Phil Ganz has over 20+ years of experience in the residential financing space. With over a billion dollars of funded loans, Phil helps homebuyers configure the perfect mortgage plan. Whether it's your first home, a complex multiple-property purchase, or anything in between, Phil has the experience to help you achieve your goals.