One of the biggest misunderstandings about VA loans is that "$0 down payment" means $0 at closing. It doesn't — but with the right strategy, you can get very close. Here's a complete, honest breakdown of what VA loan closing costs look like in San Antonio, what you can negotiate, and what you legally can't be charged.
The VA Funding Fee — Your Biggest Cost
The VA funding fee is a one-time fee paid to the Department of Veterans Affairs to sustain the VA loan program for future generations. It is not paid to your lender. It's a percentage of the loan amount and varies based on:
- Usage: First-time VA use vs. subsequent use
- Down payment: $0 down, 5–9.9% down, or 10%+ down
- Loan type: Purchase vs. refinance
2026 VA Funding Fee Schedule (Purchase Loans):
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5%–9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
On a $300,000 loan with $0 down and first-time use: 2.15% × $300,000 = $6,450 funding fee.
The good news: the funding fee can be rolled into the loan rather than paid at closing. Your loan becomes $306,450, but you don't need that cash upfront. Most VA borrowers roll it in.
Who is exempt from the funding fee:
- Veterans with a VA-rated service-connected disability (any percentage)
- Surviving spouses of veterans who died in service or from a service-connected disability
- Veterans receiving VA compensation for a pre-discharge disability rating
If you have a disability rating, make sure your lender knows before closing. The exemption can save you thousands.
Lender Fees
Every lender charges fees for originating and processing your loan. These vary between lenders, which is why shopping rates matters.
Common lender fees on a VA loan in San Antonio:
| Fee | Typical Range |
|---|---|
| Origination fee | $0–$2,000 |
| Processing fee | $400–$900 |
| Underwriting fee | $500–$1,000 |
| Application fee | $0–$500 |
The VA's 1% fee cap: The VA limits lenders to charging a maximum of 1% of the loan amount in origination fees. On a $300,000 loan, that's a $3,000 cap. Some lenders charge less; some charge the full 1%.
Note: the 1% cap covers the origination fee but not all lender fees. Processing and underwriting fees are in addition to origination, unless the lender charges a flat 1% that covers everything.
Third-Party and Government Fees
These fees are charged by parties outside your lender and are largely non-negotiable, though amounts vary.
| Fee | Typical Range in San Antonio |
|---|---|
| VA appraisal | $600–$900 |
| Title search | $200–$400 |
| Title insurance (lender's) | $500–$1,200 |
| Title insurance (owner's) | $500–$1,200 |
| Escrow/closing fee | $500–$1,000 |
| Recording fees | $50–$150 |
| Survey (if required) | $300–$600 |
| Pest inspection (required by VA) | $75–$150 |
Approximately $3,000–$5,000 in third-party fees is typical for a San Antonio VA purchase.
Prepaid Items
These are not fees — they're costs you're prepaying at closing that you'd pay anyway over time:
| Item | Typical Range |
|---|---|
| Homeowner's insurance (1 year) | $1,200–$2,000 |
| Property tax escrow (2–6 months prepaid) | $1,500–$3,500 |
| Prepaid interest (prorated to end of month) | $300–$900 |
| HOA dues (if applicable) | Varies |
Prepaids are not optional — they're required to establish your escrow account. Expect $3,000–$6,000 in prepaids, depending on your tax rate and insurance premium.
Total Estimated Closing Costs — San Antonio VA Loan
On a $300,000 VA purchase loan:
| Category | Estimated Amount |
|---|---|
| VA funding fee (rolled into loan) | $6,450 (not paid at closing) |
| Lender fees | $1,500–$3,000 |
| Third-party fees | $3,000–$5,000 |
| Prepaids and escrow | $3,000–$6,000 |
| Total out-of-pocket at closing | $7,500–$14,000 |
This is the baseline — before any concessions or assistance.
How to Reduce or Eliminate Out-of-Pocket Costs
1. Seller Concessions
The VA allows sellers to pay up to 4% of the purchase price in concessions on behalf of the buyer. Sellers can also pay all of your "allowable" closing costs (lender fees, title, appraisal) without it counting against the 4% cap.
In practice, in a buyer-friendly negotiation, you can ask the seller to pay $8,000–$12,000 in concessions. On a $300,000 home in San Antonio's current market, this is realistic — especially on homes that have been sitting for a few weeks or in neighborhoods with less competition.
2. Lender Credits
You can accept a slightly higher interest rate in exchange for lender credits toward your closing costs. This is called a "rate/credit trade-off." You pay a higher rate but bring less to closing.
Whether this makes sense depends on how long you plan to stay in the home and current rate levels. Your loan officer can model this clearly.
3. Texas Down Payment Assistance (DPA)
Even on a VA loan (which already has $0 down), Texas DPA programs through TDHCA and TSAHC can provide funds to cover closing costs. This is a lesser-known application of DPA funds that can reduce your cash at closing to near zero.
4. Rolling Fees Into the Loan
The VA funding fee and, in some cases, certain lender fees can be rolled into the loan amount. This doesn't eliminate the cost, but it removes it from your closing day obligations.
Fees the VA Prohibits Lenders From Charging Veterans
The VA's non-allowable fee list means there are costs that sellers, builders, or lenders — not you — must cover:
- Attorney fees for the lender's counsel
- Prepayment penalties
- Broker fees or real estate commissions
- HUD inspection fees (for new construction)
- Termite inspection fee (sellers typically cover this in Texas)
- Escrow fees above normal rates
Understanding this list protects you from lenders who try to pass costs onto you improperly.
What a Realistic "Low Out-of-Pocket" Closing Looks Like
Scenario: $300,000 home, first-time VA use, $0 down, seller agrees to $8,000 in concessions:
- Lender fees: $2,000 → seller pays
- Third-party fees: $4,000 → seller pays
- Prepaids: $4,500 → $2,000 covered by seller, $2,500 from buyer
- VA funding fee: rolled into loan
- Out-of-pocket at closing: ~$2,500
That $2,500 covers the prepaid portion of property taxes and insurance that the seller can't cover without exceeding limits. In some cases, even this can be addressed through DPA programs.
Get a Loan Estimate Before You Commit
The best way to understand your specific closing costs is to get a Loan Estimate from your lender before you're under contract. Federal law requires lenders to provide this within 3 business days of receiving your application. Review it line by line.
Trey Garza at Home Finish Line provides full Loan Estimates early in the process so there are no surprises at the closing table. He'll also walk you through seller concession strategy based on the specific home and market conditions.
Book a free call to review your numbers or start your pre-approval today.
Trey Garza | NMLS# 2700813 | Efinity Mortgage | San Antonio, TX