VA Loan Closing Costs in Texas: The Full Picture
One of the biggest misconceptions about VA loans is that zero down payment means zero cost to close. The down payment is eliminated — but closing costs still exist. The good news: the VA regulates many of these fees, prohibits others entirely, and gives you powerful tools to negotiate costs down to near zero.
VA Loan Closing Costs You Will Pay
Allowable Fees (VA-Permitted)
VA Appraisal Fee
Required on all VA purchases. In Texas, VA appraisal fees typically run $600–$900 depending on property type and location. The fee is paid at or before appraisal scheduling and is non-refundable.
Credit Report Fee
Lenders charge $50–$75 to pull your credit report during the loan process.
Flood Zone Determination
A one-time fee of $15–$25 to determine whether the property is in a FEMA flood zone.
Survey
In Texas, most lenders require a survey of the property. Cost: $400–$600 for a standard residential survey. In some cases the seller's existing survey can be used.
Title Search and Title Insurance
Required in Texas. Title search: $200–$400. Lender's title insurance policy: $500–$1,500 depending on loan amount. Owner's title policy: recommended and typically negotiated as a seller concession in Texas.
Recording Fees
Texas county recording fees: $100–$300. Covers the deed and deed of trust recorded with the county clerk.
Origination Fee
The VA caps this at 1% of the loan amount. On a $350,000 loan, the maximum origination fee is $3,500. Many VA lenders charge less, and some offer no-origination-fee options in exchange for a slightly higher rate.
Prepaid Items
- Homeowners insurance: First year premium paid at closing (typically $1,200–$2,000/year in Texas)
- Property tax escrow: 2–3 months of property taxes upfront
- Prepaid interest: Daily interest from closing date to end of the month
Total Typical Texas VA Closing Costs: $5,000–$12,000 depending on loan size, county, and lender
Fees the VA Prohibits Lenders From Charging Veterans
The VA's fee restrictions protect you from common junk fees. Lenders cannot charge VA borrowers:
- Attorney fees (for lender's attorney)
- Broker fees
- Real estate agent commission
- HUD/FHA inspection fees
- Prepayment penalties
- Document preparation fees
- Escrow fees above what is reasonable and customary
- Underwriting fees (in addition to the origination fee)
- Loan application fees
If a lender quotes you any of these, push back — they are prohibited under VA guidelines.
Strategies to Minimize or Eliminate Closing Costs
Strategy 1: Seller Concessions
The VA allows sellers to pay up to 4% of the purchase price in concessions toward the veteran's closing costs. On a $350,000 home, that is up to $14,000 — more than enough to cover all closing costs. Negotiate seller-paid closing costs into your offer.
Strategy 2: Lender Credits
You can accept a slightly higher interest rate in exchange for your lender covering some or all closing costs. This is called a "no-closing-cost" loan. On a $350,000 loan, a 0.25% rate increase might generate $2,000–$3,000 in lender credits.
Strategy 3: Roll the VA Funding Fee Into the Loan
The VA funding fee (2.15% for first use) can be financed into the loan rather than paid at closing — eliminating that cost entirely from your cash-to-close.
Strategy 4: New Construction Builder Incentives
Many Texas builders (D.R. Horton, LGI, Lennar, Meritage) offer to pay closing costs as a buyer incentive, especially at end of quarter or when inventory is high. This can eliminate $5,000–$15,000 in costs.
Realistic Cash-to-Close Scenarios
| Scenario | Cash Needed at Closing |
|---|---|
| Seller pays 4% concessions | $500–$1,500 (just prepaid interest + escrow gap) |
| Builder pays closing costs | $0–$1,000 |
| Lender credits cover costs | $0–$2,000 |
| No concessions negotiated | $5,000–$12,000 |
Frequently Asked Questions
The VA funding fee can always be rolled in. Other closing costs generally cannot be added to the loan unless the home appraises above the purchase price. The most reliable way to avoid paying closing costs is through seller concessions or lender credits.
No — it is a negotiation. In a buyer's market, sellers are more willing to offer concessions. Your agent can advise on what is realistic for the specific market you are buying in.
Generally no. The VA's prohibited fee list and 1% origination cap mean VA closing costs are often lower than conventional loans on a like-for-like basis. The VA funding fee is additional but can be financed into the loan.
