The VA Line Item Nobody Mentions Until Closing
A VA offer lands and the price looks good. Then, a week before closing, the listing agent learns the seller is picking up a set of fees the buyer isn’t allowed to pay. Nobody’s surprised in a good way.
VA non-allowable fees aren’t complicated. They just need to be on everyone’s radar before the contract is signed, not after.
This guide is about awareness. The exact list for a specific loan comes from the buyer’s lender, and the dollars come from the lender and the title company.
Table of Contents
▼What “Non-Allowable” Means
VA limits the fees and charges a veteran can pay on a VA-guaranteed loan. The rules are in VA’s lender guidance, and the buyer’s lender applies them to each loan. Charges outside what VA allows are “non-allowable” or “unallowable”: the veteran can’t be charged for them.
The fee doesn’t disappear. Someone else pays it. Usually that’s the seller. Sometimes the lender covers some of it.
Which Fees Tend to Come Up
The categories that come up most on Texas VA files, in our experience:
- Some lender and closing charges. Certain lender fees and settlement or closing charges fall outside what the veteran can pay. On Texas VA files, we’ve often seen part of the buyer’s share of title company charges, like the escrow fee, shift to the seller’s side.
- Attorney fees charged by the lender. Less common in Texas, where title companies handle most closings.
- Inspection fees. Termite and other inspection rules on VA purchases have changed over the years. Ask the lender how the wood-destroying insect inspection is being handled on this loan.
- Buyer-broker compensation. VA guidance on whether a veteran can pay their own broker has changed since 2024. Don’t assume. Ask the lender what currently applies before the buyer representation agreement and the offer are set.
On the other side, VA buyers generally can pay charges like the appraisal, the credit report, recording fees, their share of title insurance, prepaid taxes and insurance, and the VA funding fee (unless exempt).
This list is a guide to what to ask about, not a substitute for the lender’s answer. VA’s rules change, and lenders apply them to the specific loan. Fee questions go to the lender.
What the TREC Contract Says
The current TREC One to Four Family Residential Contract (Resale), TREC 20-19, handles this in Paragraph 12.
Paragraph 12A(1)(b) is the blank where the seller agrees to pay up to a set amount toward the buyer’s expenses, other than brokerage compensation.
Paragraph 12C, Expense Limitation, says: “If a governmental loan program regulation prohibits Buyer from paying charges or fees, then the amount of any concession in 12A(1)(b) shall be first applied to pay such prohibited expenses and then to other Buyer’s Expenses but not brokerage compensation or contribution.”
In plain English: on a VA loan, the seller’s contribution covers the non-allowable fees first. Whatever’s left goes to the buyer’s other costs. If the contribution is too small to cover the non-allowable fees, the gap still has to be solved before closing.
That’s why the 12A(1)(b) number matters so much on a VA offer. Buyer’s agents writing it, and listing agents reviewing it, both need a realistic estimate of the non-allowable fees from the lender and title before the contract is signed.
VA also caps seller concessions. The lender will confirm how a given contribution fits. See VA loan transactions in Texas.
Where the Numbers Come From
On a VA loan, certain fees can’t be paid by the buyer, and the seller’s contribution covers them. They’re a specific set of charges, not all of the buyer’s closing costs. They vary by loan, lender and title company, and the rules change, so the numbers come from the lender and title, not from memory.
Questions about how the fees are calculated or shown at closing go to the lender and the title company. Questions about what the contract obligates a party to pay go to a real estate attorney.
The Rest of the VA File
Non-allowable fees are one of several VA differences. The others to watch:
- The appraisal and Notice of Value, with the FHA/VA amendatory clause protecting the buyer on value
- Minimum Property Requirements, which can turn into lender-required repairs
- The VA box on the Third Party Financing Addendum and its deadlines
How Our TCs Handle It
Freedom doesn’t calculate, review or decide fees. That’s the lender’s and title’s job. What we do on VA files:
- Introduce ourselves to the lender, title and the co-broke agent once the contract is executed, so fee questions reach the people who can answer them
- Track the VA appraisal, the termite inspection and any repairs, with deadlines on the deadline timeline and 48-hour reminders to you
- Send weekly updates to title, the lender and the co-broke agent after the option period, and keep you current with the Monday key-dates report and Thursday status report
- If the parties agree to change the seller’s contribution, fill out the amendment only at your specific written direction, track signatures and deliver it to title and the lender
- Schedule closing with title
You’re copied on everything. The numbers come from the lender and title; the decisions stay with you and your client.
