Learn which VA closing costs Veterans can pay, which costs sellers may pay, how the VA 1% rule and 4% seller concession rule work, and the latest guidance for Idaho and Oregon homebuyers.
VA allowable closing costs are one of the most misunderstood parts of using a VA home loan in Idaho. Veterans often hear that the seller has to pay all closing costs. Sellers sometimes hear that accepting a VA offer means they will be forced to pay thousands of extra dollars. Realtors may confuse VA allowable closing costs, VA non-allowable fees, the 1% rule, and the 4% seller concession rule.
Here is the truth: the seller does not automatically have to pay all of the Veteran’s closing costs.
The key is understanding which costs the Veteran is allowed to pay, which costs may be limited by the VA 1% rule, which costs are non-allowable unless they fit within the permitted 1% structure, and which seller-paid items may count toward the VA 4% seller concession limit.
Sellers do not have to pay all VA closing costs. In many VA transactions, the Veteran can pay normal allowable closing costs. The seller, lender, builder, broker, or another party may need to cover VA non-allowable fees if those fees cannot be charged to the Veteran under VA rules.
The big takeaway: Do not confuse VA allowable closing costs, VA non-allowable fees, and seller concessions. They are not the same thing.
VA closing costs can be paid by several different parties:
The purchase contract determines much of this. VA rules determine what the Veteran may legally be charged. Those are not the same thing.
For example, a Veteran may be allowed to pay the VA appraisal fee, lender’s title policy, recording fees, prepaid taxes and insurance, and discount points. But a buyer and seller may still negotiate for the seller to pay some or all of those costs.
A VA offer is not automatically a seller-paid-closing-cost offer. If the Veteran asks the seller to pay closing costs, that needs to be negotiated in the purchase agreement just like any other buyer credit.
VA allowable closing costs are fees the Veteran may generally pay on a VA-guaranteed loan, subject to VA rules, lender requirements, and state or local customs.
Common VA allowable closing costs may include:
That does not mean every fee is automatically acceptable in every situation. The lender still needs to ensure the fees are reasonable, customary, documented, and allowed under current VA guidance. VA has also clarified when lenders must provide invoices or supporting documents for itemized fees charged to the Veteran, so proper documentation matters more than ever.
Appraisal issues come up often on VA purchases. If your appraisal comes in low, see our guides on the VA Tidewater Initiative and the Reconsideration of Value process.
The VA 1% rule is one of the biggest sources of confusion.
In simple terms, VA limits certain charges that may be paid by the Veteran. VA rules may allow a lender to charge a flat fee up to 1% of the loan amount, or charge certain itemized fees instead, but the Veteran cannot be charged prohibited non-allowable fees beyond VA limits.
While VA rules may allow a lender to charge certain lender fees within VA limits, 1st Choice Mortgage Company does not charge a 1% origination fee, underwriting fee, processing fee, or broker fee on VA loans.
This does not mean the seller automatically pays all of the Veteran’s closing costs.
The seller does not have to pay all VA closing costs. The issue is whether the Veteran is being charged fees VA does not allow the Veteran to pay, or whether certain lender and settlement charges exceed VA limits.
If a cost is not allowed to be charged to the Veteran, then the transaction must be structured so someone else pays it or the fee is removed. That “someone else” could be the seller, lender, broker, or another permitted party, depending on the transaction.
The VA 4% rule is also widely misunderstood.
VA allows sellers and builders to pay some or all of a Veteran buyer’s normal closing costs. Those normal closing cost credits are generally not the same thing as seller concessions under the 4% rule.
Seller concessions are certain additional items of value paid on behalf of the buyer. VA generally limits those seller concessions to no more than 4% of the home’s reasonable value.
Examples of items that may count toward the 4% concession limit include:
Examples of seller-paid costs that generally do not count toward the 4% concession limit include many normal closing costs such as appraisal fees, lender’s title policy, recording charges, and similar customary buyer closing costs.
Normal closing costs are one bucket.
Seller concessions are another bucket.
Do not mix them together without reviewing the actual closing disclosure and VA rules.
Historically, VA rules generally prohibited Veterans from paying real estate brokerage charges. That created a major problem after real estate commission practices began changing nationally.
VA addressed this issue through a temporary local variance allowing Veterans to pay certain buyer-broker charges, including buyer-broker commissions, when the charge is reasonable, customary, and properly documented under VA guidance. As of July 2026, that variance remains in effect and is valid until VA rescinds it or replaces it with permanent policy.
This is very important for Idaho and Oregon VA buyers because it helps keep VA buyers competitive when a seller is not offering buyer-agent compensation.
This is an area where buyers, Realtors, and lenders need to communicate early, preferably before writing the offer.
Closing cost customs vary by county, market conditions, and contract negotiation. Idaho and Oregon transactions are not always handled the same way, and even within each state, local practices can vary.
In Idaho markets like Boise, Meridian, Eagle, Star, Kuna, Nampa, Caldwell, Middleton, Idaho Falls, Twin Falls, and Pocatello, many VA closing costs are negotiated as part of the purchase contract. In a buyer-friendly market, seller credits may be more common. In a competitive seller’s market, Veterans may pay more of their own allowable closing costs to make the offer stronger.
Oregon closing cost customs may differ by area and contract. VA buyers in Oregon should confirm title, escrow, transfer, recording, and local customary fees early in the process.
The important thing is not to assume. The purchase agreement, loan estimate, and closing disclosure should all be reviewed carefully.
Purchase Price: $500,000
Possible buyer costs may include:
The seller is not automatically required to pay all of these costs. The buyer may pay allowable costs, the seller may agree to pay some costs, the lender may provide a credit, or the loan can be structured in different ways.
If the transaction includes VA non-allowable fees that the Veteran cannot pay, those fees must be removed or paid by another party. That is different from saying the seller must pay every closing cost.
Most Realtors want to help their VA buyers, but VA closing cost rules can be confusing. Here are the mistakes I see most often:
A strong VA offer is not just about price. It is about structure.
After helping Idaho veterans and military families since 1992, here is what I tell every VA buyer:
A VA loan is one of the most powerful mortgage benefits available, but it still needs to be structured correctly. Your goal should be to understand the total payment, total cash to close, seller credit options, lender credit options, and whether the contract protects you from being charged fees VA does not allow.
The right strategy depends on your situation. Some Veterans should ask for seller credits. Some should use lender credits. Some should focus on rate instead of credits. Some may want the seller to pay the funding fee. Others may be exempt from the funding fee entirely because of service-connected disability status.
There is no one-size-fits-all answer.
The most important thing is to work with a lender and Realtor who understand VA loans before the offer is written.
VA closing costs are negotiable, but they are also regulated.
The seller does not automatically have to pay all VA closing costs. The Veteran can pay many normal allowable closing costs. The Veteran may also pay some fees that are normally non-allowable if they fit within VA’s permitted 1% structure. The seller, lender, broker, builder, or another allowable party may need to cover fees the Veteran is not permitted to pay, but that is not the same thing as requiring the seller to pay everything.
If you are using a VA loan in Idaho or Oregon, the smartest move is to review your closing cost structure before you write the offer.
We will review your VA loan options, closing cost structure, and seller-credit strategy before you write your offer.
No. The seller does not automatically have to pay all VA closing costs. Many costs are negotiable, and the Veteran may pay normal allowable closing costs.
A VA buyer may generally pay allowable costs such as the VA appraisal, credit report, lender’s title policy, recording fees, prepaid taxes and insurance, discount points, and other reasonable third-party charges.
Only if it fits within VA’s permitted 1% charge structure. Escrow, settlement, and closing fees are commonly treated as non-allowable when charged separately to the Veteran.
Owner’s title insurance may be treated as a non-allowable buyer charge unless it is covered within VA’s permitted 1% structure or paid by another party. The lender’s title policy is treated differently and is generally allowable.
Yes, when the fee is treated as a reasonable and customary real estate professional charge under current VA temporary variance guidance and is properly documented.
Generally no. If the appraisal re-inspection fee is specifically due to an escrow holdback, the Veteran generally may not pay that fee.
The VA 1% rule limits certain lender and settlement charges that may be paid by the Veteran. It does not mean the seller automatically pays all closing costs.
No. 1st Choice Mortgage Company does not charge a 1% origination fee, underwriting fee, processing fee, or broker fee on VA loans.
The VA 4% rule limits certain concessions to no more than 4% of the home’s reasonable value. Normal seller-paid closing costs are generally separate from this concession limit.
The seller may generally pay normal closing costs plus seller concessions up to the VA 4% concession limit. The 4% rule applies to concessions, not every seller-paid closing cost.
Yes. A seller may pay the VA funding fee, but that payment generally counts toward the VA 4% concession limit.
Under VA’s current temporary local variance, Veterans may pay certain reasonable and customary buyer-broker charges when properly documented and allowed under VA guidance.
On a standard VA purchase loan, most closing costs cannot simply be rolled into the base loan amount. The VA funding fee may generally be financed, but other costs are usually paid through buyer funds, seller credits, lender credits, or another allowable source.
VA rules are federal, but local title, escrow, recording, and contract customs may vary between Idaho and Oregon markets.
The biggest mistake is assuming VA means no closing costs. The better approach is to review the total cash to close, seller-credit strategy, lender-credit strategy, and loan structure before writing an offer.
This page is for general education only and was last reviewed on July 7, 2026. VA guidelines, lender overlays, state practices, title and escrow customs, and real estate contracts can change. Always review your specific loan estimate, purchase agreement, and closing disclosure with your lender and real estate professional.
Jerry Robinson (NMLS #4475) is President and CEO of 1st Choice Mortgage Company, LLC (Company NMLS #380736), a licensed Idaho and Oregon mortgage broker serving the Treasure Valley community since 1992. With over 30 years of localized lending experience specializing in Idaho VA loans, FHA programs, and specialized Idaho Housing down payment assistance, Jerry has guided thousands of local families through changing market cycles to achieve homeownership from his headquarters in Meridian, Idaho. Call us at (208) 375-5626 or visit 375loan.com.
1st Choice Mortgage Company, LLC | Equal Housing Opportunity
