Ultimately, lender non-allowables are closing costs that the seller is responsible for paying.

What are lender non-allowables?

In a VA loan, there are several closing costs that are known as lender non-allowable items, because the Veterans Administration does not allow the borrower to pay these costs.

The VA limits the amount of origination fees that a lender can charge for a VA backed loan. The charges cannot exceed 1% of the loan amount.

In order to complete the sale, someone has to cover these fees. In either case, it is a negotiable that will have to be worked out between all of the parties involved in the sale.

This page includes a breakdown of the most common allowable and non-allowable charges and fees.


VA loan non-allowables

  • Base Escrow Fee
  • Loan Tie-in Fee
  • Attorney fee charged as a benefit to the lender
  • Transaction coordinator fee
  • Reconveyance Fee (okay on refi only)
  • Demand/Payoff Statement Fee (okay on refi only)
  • Sub Escrow Fee (title payoff fee)
  • Prepayment penalties (okay on refi only)
  • Any lender document fee
  • Assignment fees
  • Documentary transfer tax fee
  • Title policy endorsement fees
  • Home protection plan
  • Processing fee
  • Real estate agent commission (seller pays)
  • Warehouse fee
  • Loan discount points
  • Charges by other lenders
  • Bring-down fee
  • Change of ownership fee (PCOR penalty)
  • Tax service contract
  • Underwriting fee
  • Homeowners association transfer fee
  • Administration fee
  • Photo inspection fee
  • Recording fee-balance above $17.00
  • Termite fees or work charges (often covered by the seller)
  • Any messenger fee including overnight delivery
  • Notary fees

VA Loan Allowables:

  • Recording fee (maximum of $17.00)
  • Notary fee
  • Interest from day of recording
  • Title insurance (ALTA)
  • Tax proration to day of recording
  • Credit report
  • Home protection plan (if requested by borrower upfront)
  • Hazard insurance premium
  • Appraisal (if ordered in veteran’s name)
  • Document draw fee (if required for buyer)

FHA Loan Allowables:

  • Title insurance ALTA
  • Base escrow fee
  • Recording fees (the actual fees)
  • 1% loan origination fee
  • FHA MIP premium
  • Hazard or flood insurance programs
  • Loan discount points
  • Credit report fee (actual cost)
  • Appraisal fee (actual fee)
  • Interim interest
  • Reserves for taxes and insurance
  • Notary fee $10.00/ signature
  • FHA appraisal compliance inspection fee
  • Compliance inspection fee
  • Termite (no repairs unless approved in writing by lender. Initial inspection is okay)
  • Home warranty (if stipulated in escrow instructions and with prior approval of the lender)
  • Tests or treatments that are HUD required (with the prior written approval of the lender)
  • Broker fees (with the prior written approval of the lender)

FHA Loan Non Allowables

  • Sub escrow fee to the title company
  • ALTA endorsement fees
  • Other inspection fees are not allowed
  • Recording inspection fees
  • Processing fees
  • Document preparation fees
  • Repairs or work required on FHA appraisal (only if approved in writing by the lender)
  • Any messenger fee including overnight delivery charges
  • loan tie-in fees
  • Bring-down fee
  • Tax service contract
  • Recording assignment fees
  • Title binder
  • Tax stamps and city transfer tax charges
  • Preliminary charge of ownership report
  • Home warranty program (unless stipulated in escrow with prior written approval of the lender)
  • Photo fee and photo inspection fee
  • Transaction coordinator fee