VA Loan Closing Costs and Seller Concessions in San Diego
Quick Answer
VA loan closing costs in San Diego usually run about 2% to 3% of the loan amount when you finance 100%. The VA loan removes the down payment, not the closing costs. The seller can pay them, and there are two separate buckets. Normal closing costs have no VA percentage cap. Seller concessions, such as paying your funding fee, prepaying taxes and insurance or funding a temporary buydown, are capped at 4%. Discount points and your agent’s compensation sit outside the 4%. Knowing which bucket each dollar falls into is how you get to the table with as little cash as possible.
Sources: U.S. Department of Veterans Affairs, loan fee, temporary buydown and escape clause guidance; 38 CFR 36.4313; VA Circular 26-24-14; Escondido price and date from the MLS record, credit figures from my transaction file. The 2% to 3% range is my planning estimate, not a lender figure.
What This Guide Covers
- How much are VA loan closing costs in San Diego?
- Who pays closing costs on a VA loan?
- Closing costs vs seller concessions: the two buckets
- What is the maximum VA seller concession?
- VA allowable and non-allowable fees
- Can you roll closing costs into a VA loan?
- The VA escape clause if the appraisal comes in low
- Using a seller credit to buy down your rate
- A real VA purchase: $17,000 in seller credits
- VA closing costs in Otay Ranch, Rancho Del Rey and San Miguel Ranch
- When sellers say yes to credits
- Frequently asked questions
How much are VA loan closing costs in San Diego?
This is the first thing I correct on almost every VA buyer consultation. A zero down VA loan means no down payment. It does not mean no cash. There are always closing costs.
The number I tell buyers, and I keep it conservative on purpose, is about 2% to 3% of your loan amount if you are financing 100%. On a $700,000 loan that is roughly $14,000 to $21,000. It fluctuates. It could be a little less, it could be a little more, but it is a good number to plan around before you have a Loan Estimate in hand.
What goes into it: escrow and title charges, the VA appraisal, lender fees, recording fees, any discount points, and your prepaid property taxes and homeowners insurance. Some of those are one-time transaction costs. Others are money you would owe anyway, just collected up front.
If you are still working out your price range, start with how much house a VA buyer can afford in San Diego.
Who pays closing costs on a VA loan?
Under VA’s own guidance, closing costs such as the VA appraisal, credit report, state and local taxes and recording fees may be paid by the buyer, the seller, or shared. That is what makes the VA loan so negotiable.
In practice you have two options, and I walk every VA buyer through both:
- Option A: you pay the closing costs out of pocket at closing.
- Option B: you ask the seller for a closing cost credit, often by raising the offer price by about the same amount, so the seller nets the same and your cash to close drops.
In my experience, when the market gives buyers room, sellers offer concessions more readily. My buyers have secured permanent buydowns, temporary 2-1 buydowns and combinations of the two, on top of closing cost credits.
Closing costs vs seller concessions: the two buckets
This is the distinction that changes how you write a VA offer. What the seller pays is not one category. VA treats it as separate buckets, and only one is capped.
| What the seller pays | Counts toward the 4%? | Examples |
|---|---|---|
| Normal closing costs | No | Escrow and title charges, the VA appraisal, credit report, recording fees, lender fees |
| Discount points | No | Points that permanently lower your note rate. VA states discount points are not subject to the 4% limit |
| Your agent’s compensation | No | VA does not treat the seller paying buyer broker charges as a concession |
| Seller concessions | Yes, capped at 4% | Paying your VA funding fee, prepaid taxes and insurance, paying off your debts or judgments, funding a temporary buydown, gifts |
The practical result: a seller can pay all of your normal closing costs, buy down your rate with points and still provide up to 4% in concessions. Most buyers, and a surprising number of agents, think 4% is the ceiling on everything a seller can contribute. It is not, and treating it that way leaves money on the table. The compensation point comes straight from VA Circular 26-24-14, which remains in effect until VA rescinds it.
What is the maximum VA seller concession?
VA caps seller concessions at 4%. On a $700,000 home that is up to $28,000. The concession bucket covers the seller paying your funding fee, prepaying your taxes and insurance, paying off debts or judgments, and funding a temporary buydown.
4% of what?
VA’s temporary buydown guidance ties the cap to the reasonable value set by the VA appraisal. An older VA loan fee page describes it as 4% of the loan. Either way, your lender runs the exact ceiling on your file, and an appraisal that comes in under the price can shrink it. If you are structuring near the ceiling, leave a buffer.
The funding fee is where the 4% goes fastest. A first-use funding fee with less than 5% down is 2.15%, so on a $700,000 loan the seller paying it would use $15,050 of the room. That is why I often suggest financing the funding fee and aiming seller money at items outside the cap.
VA allowable and non-allowable fees
VA also limits what the lender can charge you. Under 38 CFR 36.4313, a lender may charge a veteran a flat fee of up to 1% of the loan amount, in place of itemizing its own origination costs. Some charges simply cannot be passed to you, which is why the seller or lender ends up covering them on a VA file.
Ask your lender for a fee sheet early that separates what you pay, what the seller pays, and what counts as a concession. Late reclassification is how a compliant deal turns into a closing-week scramble.
Can you roll closing costs into a VA loan?
Not directly. VA caps the loan at the lesser of the purchase price or the reasonable value, and the funding fee is the cost you can finance on top of that. What buyers actually do is raise the purchase price by about the amount of the closing costs and ask the seller for a credit in that amount. The seller nets the same. You bring less cash.
Here is what that looks like on a $700,000 net to the seller, for a first-use veteran with no down payment who finances the funding fee:
| Option A: pay at closing | Option B: price up, take the credit | |
|---|---|---|
| Purchase price | $700,000 | $721,500 |
| Seller credit | None | $21,500 |
| Seller nets | $700,000 | $700,000 |
| Funding fee at 2.15%, financed | $15,050 | $15,512 |
| Total loan | $715,050 | $737,012 |
| Cash for closing costs | About $21,500 | About $0 |
| Principal and interest at 7.03% | $4,772 | $4,918 |
Illustrative only, dated September 26, 2026. The rate is the Freddie Mac 30-year average for the week of September 24, 2026, a conventional benchmark; your VA rate will differ. Option B works only if the appraisal supports the higher price.
The difference is about $147 a month, roughly $52,800 over thirty years, in exchange for not bringing $21,500 to closing. Neither answer is automatically right. If you want to keep cash in reserve, Option B is often how the deal gets done. If you have the cash and plan to hold the home for decades, Option A costs less. What I will not do is let a buyer choose Option B without seeing that second number.
The VA escape clause if the appraisal comes in low
Raising the price to absorb a credit only works if the home appraises. If the reasonable value comes in below your contract price, VA’s loan follows the lower number.
The protection every VA buyer has
The VA escape clause, also called the amendatory clause, is required under 38 CFR 36.4303(k)(4) in every VA purchase contract signed before the Notice of Value is issued. If the price exceeds the reasonable value VA establishes, you can renegotiate with the seller, proceed and cover the difference yourself, or cancel without losing your earnest money deposit. If the clause is missing, the contract has to be amended before closing or VA will not guarantee the loan.
Two limits worth knowing. The clause only applies when the reasonable value comes in below the price, not to any other reason for cancelling. And deposits to a builder for upgrades on new construction are not earnest money, so they are not covered. If you disagree with the value, you can also request a reconsideration of value through your lender. What the appraiser looks at is covered in VA appraisal requirements in San Diego, and how your deposit is protected more broadly is in earnest money and contingencies in San Diego.
Writing a VA offer soon?
The credit structure gets decided when the offer is written, not after. I will walk you through what the seller needs to net and how much credit that property can realistically support.
Using a seller credit to buy down your rate
If you are going to point seller money at your rate, the structure matters, both for your payment and for your 4%.
Permanent buydown
- Discount points lower the note rate for the life of the loan
- VA states discount points are not subject to the 4% limit
- Best when you plan to keep the loan for years
Temporary buydown
- Escrowed funds lower your payment for one to three years, such as a 2-1
- When the seller funds it, VA counts it as a seller concession
- VA requires lenders to qualify you on the full payment after it ends
Here is how I frame it with buyers. Take $10,000. Applied to the price, it lowers your payment by about $67 a month at a 7.03% rate. Applied to a permanent buydown, it can lower your payment by more than that, depending entirely on how your lender prices points the day you lock. That is a comparison to run with your lender before you decide what to ask the seller for, and it is why I always recommend a VA specialist lender when we write these offers. If you are thinking about waiting for rates to fall instead, read should buyers wait for rates to drop in San Diego.
A real VA purchase: $17,000 in seller credits
Escondido, July 2026
I represented a VA buyer on a detached two-bedroom home in Escondido that closed in July 2026 at $702,000. We were competing against another offer, and we still got the seller to $12,000 in closing cost credits at acceptance.
Once we were in escrow, I went back and negotiated another $5,000. Total seller credits: $17,000.
What we did with it is the part that matters. Ten thousand dollars funded a permanent buydown to a 5.875% note rate, fixed for the full thirty years. The remaining $7,000 covered recurring and non-recurring closing costs, which lowered the cash my buyer brought to the table.
For context, the Freddie Mac 30-year average was 6.58% the week that sale closed. A note rate that starts with a 5 is a different loan than one that starts with a 6, every month, for thirty years. The $17,000 was about 2.4% of the price. Even 4% of the price would have been $28,080, and the discount points sit outside the cap anyway.
That second credit is the piece most buyers never see. Leverage does not end at acceptance. It changes shape. A seller weighing competing offers is thinking about certainty. A seller thirty days into escrow who has already made plans is thinking about not starting over.
VA closing costs in Otay Ranch, Rancho Del Rey and San Miguel Ranch
In my experience, Chula Vista is one of the biggest areas for my VA buyers, and a big reason is location. Chula Vista sits just south of National City, close to Naval Base San Diego along the bay, and not far from Naval Amphibious Base Coronado and Naval Air Station North Island. Even East Chula Vista, in communities like Otay Ranch, Rancho Del Rey and San Miguel Ranch, is relatively close to those bases compared with a lot of other parts of San Diego County.
Here is what the closing cost range and the 4% look like at each community’s median detached price, with nothing down:
| At the median detached price | Otay Ranch | Rancho Del Rey | San Miguel Ranch |
|---|---|---|---|
| Median sale price | $1,015,000 | $1,013,500 | $1,272,500 |
| Closing costs at 2% to 3% | $20,300 to $30,450 | $20,270 to $30,405 | $25,450 to $38,175 |
| First-use funding fee, 2.15% | $21,822 | $21,790 | $27,359 |
| 4% concession ceiling | $40,600 | $40,540 | $50,900 |
| Left if the seller pays the funding fee | $18,778 | $18,750 | $23,541 |
Illustrative only, dated September 26, 2026. Medians are Paragon MLS detached sales, trailing 12 months to September 21, 2026, by community boundary. Closing costs use my 2% to 3% planning range on the price; the concession ceiling assumes the appraisal comes in at the median. HOA dues and Mello-Roos vary by home and are not included. Your lender provides the real figures.
Notice that normal closing costs on a median Otay Ranch home can run $20,000 to $30,000, and none of that has to touch the 4%. A seller credit for closing costs plus a seller-paid funding fee can both fit on the same file, as long as each is classified correctly. You can browse what is on the market across Chula Vista homes for sale.
When sellers say yes to credits
None of this works if the seller says no, so it is worth being direct about when credits are realistic. In my experience, sellers are more likely to give credits when the home has been sitting on the market, when it needs updating, when competition is limited, or when a buyer cannot quite reach the number the seller needs.
That last point is the key. The seller only cares about their net. A $700,000 offer with no credit nets $700,000. A $721,500 offer with a $21,500 credit nets the same $700,000. Identical for the seller, completely different for you. When I present a credit request, I present the seller’s net, not the credit in isolation. How the rest of a strong offer comes together is in how to write a winning offer in San Diego, and why structure is the whole game on a VA purchase is in why VA experience matters when you choose a realtor.
How I work with VA buyers on closing costs
I am a Realtor, not a lender. I do not quote rates or originate loans. My job is to structure the offer, negotiate the credit and make sure the money available to you actually reaches you. Before we write, I talk with a VA-focused lender about what is most beneficial for my buyer, then build the offer around the answer.
You can read what past buyers say about working with me on my client reviews page, start your purchase with Lovery, and see the full VA picture in my complete guide to VA home loans in San Diego.
Frequently Asked Questions
How much are VA loan closing costs in San Diego?
The rule of thumb I give buyers is 2% to 3% of the loan amount if you are financing 100%. On a $700,000 loan that is roughly $14,000 to $21,000. It includes escrow and title charges, the VA appraisal, lender fees, recording and your prepaid taxes and insurance. Your Loan Estimate gives the real number for your file.
Who pays closing costs on a VA loan?
VA allows closing costs to be paid by the buyer, the seller, or shared. One of the most useful structures is a seller credit negotiated as part of the offer. The seller can pay your normal closing costs with no VA percentage cap, and separately provide seller concessions up to 4%.
What is the maximum seller concession on a VA loan?
VA caps seller concessions at 4%. Concessions include the seller paying your VA funding fee, prepaying your taxes and insurance, paying off your debts or judgments, and funding a temporary buydown. Normal closing costs and discount points sit outside that cap. VA guidance ties the 4% to the reasonable value from the VA appraisal, so your lender calculates the exact ceiling.
Do seller-paid closing costs count toward the VA 4% limit?
No. The 4% limit applies to seller concessions, not to the seller paying your normal closing costs. A seller can cover your ordinary closing costs and still provide up to 4% in concessions on the same purchase.
Does seller-paid buyer agent commission count as a VA seller concession?
No. VA Circular 26-24-14 states that VA does not treat the seller paying the buyer broker charges as a seller concession. The circular remains in effect until VA rescinds it.
Can you roll closing costs into a VA loan?
Not directly. VA caps the loan at the lesser of the purchase price or the VA reasonable value, and the funding fee is the cost you can finance on top. What buyers do instead is raise the price by about the amount of the closing costs and ask for a matching seller credit. The seller nets the same, and your cash to close drops, as long as the appraisal supports the higher price.
Can the seller pay my VA funding fee?
Yes. A seller-paid funding fee is a seller concession, so it counts toward the 4% limit. You can also finance the fee or pay it in cash. Veterans receiving VA compensation for a service-connected disability, and certain other groups VA lists, do not pay a funding fee.
Do discount points count toward the VA seller concession limit?
VA states that payment of discount points is not subject to the 4% limit. That makes a seller credit aimed at a permanent rate buydown one of the most efficient uses of seller money on a VA purchase. Have your lender confirm how every item is classified on your file.
Does a temporary buydown count toward the VA 4% limit?
Yes. When the seller or builder funds a temporary buydown, VA treats it as a seller concession. VA also requires lenders to qualify you on the full payment after the buydown ends, so it lowers your early payments without raising your approval amount.
What is the VA escape clause?
The VA escape clause, also called the amendatory clause, must be in every VA purchase contract signed before the Notice of Value is issued. If the price is higher than the reasonable value VA establishes, you can renegotiate, proceed and cover the difference, or cancel without losing your earnest money deposit.
What fees can a veteran not pay on a VA loan?
VA limits the fees a veteran can be charged. Instead of itemizing its own origination costs, a lender may charge a flat fee of up to 1% of the loan amount. Ask your lender for a fee sheet that shows which charges fall on you and which must be paid by someone else.
Is it better to ask for a price reduction or a closing cost credit?
It depends on your cash. A $10,000 price reduction lowers your payment by about $67 a month at a 7.03% rate. The same $10,000 as a credit lowers your cash to close, and if you use it for a permanent buydown it can lower your payment more, depending on how your lender prices points that day. Have your lender run both before you decide.
Ryan Fisher
Realtor · Founder, Lovery Real Estate
I am a San Diego Realtor and the founder of Lovery Real Estate, with $56M+ in career sales across 90+ transactions. I work with buyers across Chula Vista, Bonita, North Park, University Heights, Normal Heights and La Jolla Mesa, and throughout San Diego County, including many military and VA buyers.
Before real estate I played professional baseball after being drafted out of UC Irvine. I grew up around Fisher Bros. House Moving, the fifth-generation California house-moving business my family ran from the 1850s, and worked in it myself before real estate.
Here are your options, here are the numbers, here is what I would do. No pressure. No performance.
Let’s structure your credits before you write
If you are buying with a VA loan anywhere in San Diego County, the closing cost and concession strategy should be decided before the offer goes out. I will walk through the seller’s likely net, what credit that property can support and where each dollar should go.
Ryan Fisher, Realtor. California DRE #02110091. Lovery Real Estate is a brand of Ryan Fisher, licensed under LPT Realty. 323 Minot Ave, Chula Vista, CA 91910. This article is general information and is not legal, tax, or lending advice. VA and your lender determine loan eligibility, fees and how each cost is classified on your file. Payment figures are illustrative estimates, not loan quotes.