Can the Seller Pay Your VA Funding Fee in Pinal County?
Quick answer
Yes. VA lets a seller or builder pay your VA funding fee. VA counts that as a seller concession, and concessions are capped at 4% of the home's reasonable value from your VA Notice of Value. Regular seller-paid closing costs aren't capped by VA, so how the credit is written matters.
Can a seller pay my VA funding fee in Arizona?
Yes. VA.gov says sellers or builders can offer credits to help a VA buyer. And it lists the funding fee as one of the things a seller can cover.
But there's a catch. VA treats a seller-paid funding fee as a "concession." And concessions have a limit.
I'm Andria Townsend, a loan officer in San Tan Valley. I work with a lot of military families around Pinal County. Here's how this plays out.
What's the difference between closing costs and concessions?
This is the part most people mix up.
- Closing cost credits: VA says it doesn't limit seller credits for a loan's closing costs. Think title, recording, and lender fees.
- Concessions: VA limits these to no more than 4% of the home's reasonable value. VA defines a concession as anything of value added to the deal at no extra cost to you.
VA's own examples of concessions: paying your funding fee, paying off your debt, or prepaying your hazard insurance.
Does a seller-paid funding fee count toward the 4% cap?
Yes. VA.gov names "credits for the VA Funding Fee" as a concession. So it counts toward the 4% limit.
You'll see websites say otherwise. I go with what VA says on its own site.
Where does "reasonable value" come from? Your VA Notice of Value, which comes from the VA appraisal. Your lender shares it with you.
Do I even have to pay the funding fee?
Maybe not. VA says you're exempt if any of these apply:
- You get VA compensation for a service-connected disability
- You're eligible for that compensation but get retirement or active-duty pay instead
- You get Dependency and Indemnity Compensation as a surviving spouse
- You're a service member with a proposed or memorandum rating before closing that says you're eligible for compensation
- You're active duty and show proof of a Purple Heart on or before closing
If you're exempt, you don't need the seller to cover the fee. You can aim that 4% at something else.
Can I just finance the funding fee instead?
Yes. VA says you can add the funding fee into your loan, or pay it at closing. On a purchase, it's the only fee VA lets you finance. Everything else gets paid at closing.
So you have choices. Ask the seller to cover it. Finance it. Or pay it. Each one changes your cash to close and your loan amount differently.
How do I ask for this in my offer?
Talk to your agent and your loan officer before you write the offer. We want the wording to match what VA allows. A credit labeled for closing costs is treated differently than one labeled for the funding fee.
I wrote about seller help in general in Can the Seller Pay Your Closing Costs in Pinal County?.
What does this mean for Florence and San Tan Valley veterans?
If you're buying near Florence, read Do Disabled Veterans Pay Property Tax in Florence, AZ? too. A disability rating that waives the funding fee may also matter for property taxes.
What does this mean for sellers?
If a VA buyer asks for help, it's not always a big ask. Knowing VA's rules helps you plan your net. Talk with your agent about what's best for you.
What does this mean for current homeowners?
If you're a veteran thinking about a VA cash-out refinance, there's a funding fee there too, unless you're exempt. Seller concessions don't apply to a refinance.
Frequently asked questions
Can the seller pay my VA funding fee?
Yes. VA allows it. VA counts a seller-paid funding fee as a seller concession.
What is the VA 4% seller concession limit?
VA limits seller concessions to no more than 4% of the home's reasonable value, shown on your VA Notice of Value. Regular closing cost credits aren't limited by VA.
Who doesn't have to pay the VA funding fee?
VA says veterans getting compensation for a service-connected disability, some surviving spouses, and certain service members are exempt. Your Certificate of Eligibility will show your status.
Can I roll the VA funding fee into my loan?
Yes. On a purchase, the funding fee is the only cost VA lets you finance into the loan.
What counts as a VA seller concession?
VA's examples include paying your funding fee, paying off your debt, and prepaying your hazard insurance.
Subject to eligibility, credit approval, and program guidelines. Programs can change.
Have a question about your situation?
Every file is different. I'm happy to look at yours, answer questions, and help you plan your next step. No pressure.
Get pre-approved or ask Andria a question at andriatownsend.com or call 480-487-9166.
About the author: Andria Townsend is a Mortgage Loan Originator with NEXA Mortgage, LLC, based in San Tan Valley, Pinal County. She's lived in Arizona for 15+ years and helps buyers and homeowners across the state.
Andria Townsend, Mortgage Loan Originator, NMLS #2154631. NEXA Mortgage, LLC, NMLS #1660690. Equal Housing Opportunity. This is not a commitment to lend. All loans subject to credit approval, underwriting, and program guidelines.
