What Are VA Non-Allowable Fees?
When you sell to a buyer using a VA loan, certain closing costs are off-limits for the buyer. The VA prohibits them from paying these fees. The costs don’t disappear — they shift to someone else, usually the seller. That’s what “non-allowable” means: the buyer isn’t allowed to pay them, so you do.
The additional cost to sellers is typically $1,000-3,000 on a Houston transaction. It’s real money. It’s also a fraction of the total deal — and rejecting VA offers to avoid it usually costs more in the long run than just paying it.
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▼Which Fees Are Non-Allowable?
The VA restricts buyers from paying certain fees it considers the seller’s or third party’s responsibility. Common non-allowable fees include:
- Attorney fees — if an attorney is involved in closing (less common in Texas where title companies handle closings)
- Brokerage or admin fees — certain fees charged by the brokerage
- Pest/termite inspection — the VA often requires termite clearance and the buyer can’t pay for it
- Some title company charges — certain administrative fees the VA considers non-allowable
The specific list can vary by lender and changes periodically. Your title company knows exactly which fees apply. Your broker should get this information before you accept a VA offer so there are no surprises at closing.
Which Fees CAN the VA Buyer Pay?
VA buyers can pay:
- VA appraisal fee
- Credit report fee
- Recording fees
- Survey (if required)
- Title insurance (their portion)
- Prepaid taxes and insurance
- VA funding fee (typically rolled into the loan)
The seller isn’t covering “all the buyer’s closing costs.” You’re covering a specific subset of fees the VA prohibits the buyer from paying. It’s a targeted cost, not a blank check.
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How VA Non-Allowable Fees Affect Your Net Proceeds
Here’s what it looks like on a $400,000 sale:
| Cost | Conventional Buyer | VA Buyer |
|---|---|---|
| Listing commission (1%) | $4,000 | $4,000 |
| Buyer agent comp (2.5%) | $10,000 | $10,000 |
| Title insurance | $2,800 | $2,800 |
| Standard closing costs | $1,500 | $1,500 |
| VA non-allowable fees | $0 | $1,000-3,000 |
| Total seller cost | ~$18,300 | ~$19,300-21,300 |
| Additional cost for VA | — | $1,000-3,000 |
The extra $1,000-3,000 is real. But in context, it’s 0.25-0.75% of the sale price. If the VA buyer’s offer is strong — good price, solid earnest money, clean terms — the non-allowable fees are a small line item in a much bigger picture.
Why Some Sellers Avoid VA Buyers (And Why They Shouldn’t)
Some sellers hear “VA loan” and immediately think hassle. They picture longer closing timelines, stricter property requirements, and extra costs. So they pass on VA offers. That’s usually a mistake. Here’s why:
VA buyers are well-qualified. VA loans are backed by the federal government. The VA guarantees a portion of the loan, meaning the lender carries less risk and the buyer has been through a rigorous qualification process. VA borrowers tend to have stable income and verified employment.
VA loans are reliable. Because of the government guarantee, VA loans have lower default rates than conventional and FHA loans. A VA buyer who’s been approved is likely to close.
Rejecting VA shrinks your buyer pool. Houston has a significant military and veteran population. Joint Base San Antonio feeds relocations throughout Texas. Houston’s VA Medical Center and defense industry employers bring veteran buyers to the market regularly. Turning away VA offers means turning away qualified buyers.
The cost is predictable. Your broker and title company can tell you exactly what the non-allowable fees will be before you accept. Factor it into your decision when comparing offers — no guessing required.
The arguments against VA — slightly longer timeline and property condition requirements — are manageable with preparation. Neither should be a reason to reject an otherwise strong offer.
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VA Minimum Property Requirements
VA appraisers check for basic habitability. These aren’t cosmetic standards — they’re health and safety minimums:
- Roof must be functional (no active leaks, reasonable remaining life)
- No peeling paint on pre-1978 homes (lead paint concern)
- Working plumbing, electrical, and HVAC
- No structural hazards
- Safe water supply and sanitary sewage disposal
- Adequate access to the property
Most homes in reasonable condition pass without issues. If your home has significant deferred maintenance — active roof leak, non-functional HVAC, major structural problems — those need to be addressed regardless of buyer loan type. Any buyer’s inspector is going to find the same things.
If the appraiser does flag something, see lender required repairs before closing for how to handle it.
Tips for Sellers Dealing with VA Offers
Don’t automatically reject. Evaluate the full offer — price, terms, qualification, timeline. The non-allowable fees are one line item in a bigger picture.
Ask your broker to estimate the cost. Before accepting or rejecting, know what the non-allowable fees will actually be. Don’t guess — get the number from the title company.
Factor it into your counter. If non-allowable fees add $2,000 to your costs, you can counter $2,000 higher on price. Most buyers understand this.
Make sure your home meets basic standards. If your roof is leaking or your HVAC doesn’t work, fix it before listing. Not because of VA requirements — because any buyer is going to have issues with it.
Allow extra days for closing. VA loans can take 35-45 days instead of 30-35. Build that into your expectations.
For a full picture of what it costs to sell in Houston, see how much does it cost to sell a house in Houston. For the complete selling process, start with how to sell a house in Houston.
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Frequently Asked Questions
What are VA non-allowable fees?
VA non-allowable fees are closing costs that VA loan rules prohibit the buyer from paying. When you sell to a VA buyer, the seller or the buyer's agent typically covers these costs. Common non-allowable fees include attorney fees, brokerage fees, and certain title charges.
Do I have to pay the buyer's closing costs if they have a VA loan?
Not all of them — only the specific fees the VA designates as non-allowable. These are typically a small portion of total closing costs. Your broker should itemize what you'd be responsible for before you accept a VA offer.
Can I refuse to sell to a VA buyer?
You can accept or reject any offer for any reason. However, rejecting VA offers limits your buyer pool significantly. VA buyers are often well-qualified borrowers backed by a government guarantee.
How much do VA non-allowable fees cost the seller?
The additional cost is typically $1,000-3,000 depending on the transaction. This varies by title company and local practice.
Are VA loans harder to close than conventional?
VA loans can take slightly longer (35-45 days vs 30-35) and have specific property requirements. But VA buyers are often strong borrowers with government-guaranteed financing and lower default rates.
