Is There a VA Administration Fee?

Is there such a thing as a VA administration fee?

The answer right up front: no, and I’m going to explain why.

So recently, we got two examples that just blew my mind. We had some buyers come in and gave us other loan estimates they were looking at with some other lenders. And they ended up having in their Box A – that is the top left corner of your loan estimate where it says lender costs and lender fees – and they had a fee on there that was called the VA administration fee.

Now, it sounds very close to where you might have said, ‘Evan, there is a VA administration fee.’

There’s not.

There’s a VA funding fee charged directly from the VA.

However, a VA administration fee, that is a lender cost that sometimes we have now seen twice thrown on loan estimates to give to buyers.

Now, what is one of the major concerns that we have with that right up front?

It sounds very close to the VA funding fee.

So as a buyer, you might confuse that and think that it is an actual fee from the VA.

It’s not.

The VA funding fee is down another section. That’s where you’re going to see it say literally VA funding fee and if it’s financed or not on your initial loan estimate.

The loan estimate is that official document that a lender has to give you within three days of you getting a home under contract that breaks out your initial cost estimate.

It’s not perfect necessarily in terms of all your title taxes and ETAs, but it gives you some good estimate for it.

The goal is that we’re giving you a document right up front when you’re getting your home under contract to get a good idea in the grasp of costs.

Now, the one thing that lenders do truly have control over, taxes, insurance, that stuff has to be estimates unless we got them already from title or insurance company, but the lender costs – we have control over those.

So, when we put that Box A – that section that says your lender charges – that we have control of. And so, if you see in there anything that says VA on it, that means a lender is really deciding to call it that.

So, that VA administration fee, know that it’s something that a lender has just put in there.

Very similar to where you might see in the Box A – you might see origination fee or processing fee or underwriting fee.

You may hear some lenders refer to those as junk fees.

They’re not real, and they throw them out.

Well, you’re getting charged somewhere.

Watch our video on what we like to call the three-way teeter-totter on how lenders charge you: through interest rate, finance points, and for lender pay closing costs.

But the deal is, if you see VA administration fee in that top left corner, that’s the lender setting that charge.

The VA really only gets you with the VA funding fee, and it’s mentioned a section below on that, and it’s clearly outlined. And typically, folks financing VA loans, you see in little parenthesis financed.

But in that top box, that got me fired up now seeing it for the second time, VA administration fee, VA lender fee, whatever it might be, something named with it.

If you have VA in that top left corner, know that that’s generally going to be a lender charge to it.

And so, are processing fees, origination fees, and are those lender charges in the top left real?

Of course, they’re real. It costs money to do the loan.

But the deal is, naming it that, like we just had our borrower a little bit confused on, ‘Hey, is that charged from the VA? That must not be the lender.’

It’s a charge that lender has control over.

So, keep in mind that the one charge from all this that the VA is really charging you up front is the VA funding fee, named specifically VA funding fee, and it’s outlined in the second section there for your loan estimate.

And that’s typically going to be financed in a loan, but you can choose to pay it outside if you want. You can pay it yourself or have the seller pay for it directly.

My name’s Evan Kaufman, your VA loan originator. I hope this helps you go out there not only win a home with a VA loan as we say but get a home, and make sure that you feel comfortable with what you’re being estimated for your pricing. Take care.