Itemizing VA Cash to Close at $400K With a Funding Fee Exemption
October 24, 2026
Once the funding fee is out of the picture, the question changes. It is no longer "what does VA charge me?" It becomes "what is left on the Loan Estimate, and who can pay it?" Here is a line-by-line way to think about a $400K purchase for an exempt borrower, using Franklin, a fictional veteran, as the example.
Step one: sort every charge into three buckets
Franklin's total cash to close breaks into three groups.
Bucket one is lender charges. VA allows a flat charge for origination, capped by VA, and that flat charge is meant to cover the lender's own work. Individual add-on lender fees stacked on top of it deserve a question.
Bucket two is third-party charges: the VA appraisal, credit report, title and settlement services, and recording fees. These vary by provider and by the specifics of the transaction.
Bucket three is prepaids and escrow deposits: homeowners insurance, tax and insurance escrow starting balances, and interest from closing to the first payment date. These aren't lender profit and they aren't fees in the usual sense, but they are real cash.
What the total tends to look like
A common planning rule is two to five percent of the loan amount for everything combined, which on $400K is roughly $8,000 to $20,000. That's a range, not a quote, and nobody can responsibly give you a precise number without a Loan Estimate and a contract in hand.
The spread is wide because of bucket three. A closing date early or late in the month, the size of the escrow cushion, and the cost of the insurance policy can move the total more than people expect.
Fees a veteran should not see
VA maintains a list of charges a veteran isn't permitted to pay. If a lender's Loan Estimate shows something that looks like a general add-on, such as a bundle of processing and underwriting items beyond the allowed flat charge, ask the lender to explain how it fits within VA's rules. Pamphlet 26-7 is the VA lender handbook that governs this. A good lender will be comfortable with the question.
Who else can pay
VA allows the seller to pay some or all of a buyer's closing costs. VA also sets a cap on seller concessions at 4 percent of the home's reasonable value, and VA treats the veteran's normal closing costs separately from that cap in some respects. Your lender should confirm how each specific item is classified before the contract is finalized.
The practical point is timing. Seller-paid costs are a negotiation item, so they belong in the offer, not in a request after the inspection period starts to drain leverage.
A working sequence for Franklin
1. Get a Loan Estimate and mark each line as bucket one, two, or three.
2. Get a second Loan Estimate and compare bucket one first, since that's where lender choice matters most.
3. Ask the agent to write seller-paid closing costs into the offer.
4. Reserve cash for bucket three even if buckets one and two are covered.
5. Recheck the final Closing Disclosure against the Loan Estimate before signing.
Where local context helps
For buyers in the Charleston area, the local piece is mostly about the agent and the title company: who is experienced with VA contracts, and who will include seller-paid language cleanly. Ask early.
What to take away
A waived funding fee is a meaningful benefit, but it doesn't change the structure of closing costs. Sort the charges, question anything that looks like a stacked lender fee, negotiate seller-paid costs up front, and keep cash on hand for prepaids.
Franklin is an illustrative character, not a real client. If you're a VA buyer and want your Loan Estimate reviewed, call me at 843-LOW-RATE. I find the path.
Jason Sharon, Licensed Mortgage Broker, Home Loans Inc. NMLS #1281448. Company NMLS #1728740. Equal Housing Opportunity.