How Much Is a VA Appraisal and Who Pays?

When pursuing homeownership with a Department of Veterans Affairs (VA) loan, understanding the appraisal process is an important step. A VA appraisal serves a dual purpose: it establishes the home’s fair market value and ensures the property meets specific safety and livability standards. This assessment is a mandatory component for nearly all VA-backed home purchases and refinances.

The VA appraisal is distinct from a home inspection, which offers a more exhaustive review of a property’s physical condition. While an appraisal confirms the home’s value and adherence to VA guidelines, it does not guarantee the absence of all defects. The VA recommends that prospective buyers secure a separate home inspection for a comprehensive understanding of the property’s state.

VA Appraisal Costs

The cost of a VA appraisal can vary across different regions and property types. Generally, these fees range from approximately $400 to $1,200. In high-demand markets, fees can reach $1,500 or more.

This fee covers the appraiser’s evaluation, including a physical inspection and a detailed report. The report assesses the home’s market value by analyzing recent comparable sales in the area. It also verifies that the property adheres to the VA’s Minimum Property Requirements (MPRs).

The Department of Veterans Affairs sets maximum allowable fees for appraisals in each state and sometimes even by county. This regulation helps protect buyers from excessive charges. While the typical fee covers the standard appraisal, additional charges may apply in certain situations, such as mileage for remote properties.

Who Pays the VA Appraisal Fee

The responsibility for paying the VA appraisal fee typically falls to the buyer. This fee is generally paid upfront as part of the closing costs associated with the loan. Prospective homebuyers should factor this expense into their budget when planning a home purchase with a VA loan.

Although the buyer usually pays, there are scenarios where other parties might cover this cost. Sellers can agree to pay the appraisal fee as part of negotiated concessions. However, it is less common for sellers to cover this specific fee.

The VA itself does not pay for the appraisal, despite requiring it for loan approval. While the lender orders the appraisal, they are not typically responsible for paying the fee either. This structure ensures the appraiser remains an independent third party, providing an unbiased assessment of the property’s value and condition.

Factors Affecting Appraisal Fees

Several factors can influence the final cost of a VA appraisal. The type of property being appraised is a primary factor. Multi-unit dwellings, manufactured homes, or properties with unique features may incur higher appraisal fees than standard single-family homes.

The property’s geographical location also plays a role in fee determination. Costs vary by region, with higher fees often seen in the West and Northeast compared to the Midwest and South. High-demand counties, where there is increased competition for appraiser services, may also see elevated fees.

Additional charges can arise from specific circumstances. Appraisers may charge extra for mileage if the property is located a considerable distance from their base. If a property initially fails to meet VA Minimum Property Requirements and requires a re-inspection after repairs, an additional fee is typically charged for the follow-up assessment.

Understanding Additional VA Loan Fees

The VA appraisal fee is just one of several costs involved in obtaining a VA loan. Another significant charge is the VA Funding Fee, a one-time payment supporting the VA home loan program, which eliminates the need for a down payment or monthly mortgage insurance. This fee is typically a percentage of the loan amount, ranging from 0.5% to 3.3%, and varies based on loan type, first-time or subsequent use, and down payment amount. Borrowers can often finance the VA Funding Fee into the loan amount rather than paying it upfront, though this increases the total interest paid over the loan’s term. Certain veterans, such as those receiving VA compensation for a service-connected disability, are exempt from paying this fee.

Beyond the appraisal and funding fees, borrowers will encounter various closing costs, which are expenses required to finalize the mortgage transaction. These costs commonly range from 3% to 6% of the loan amount. Common closing costs include loan origination fees, which are limited to 1% of the loan amount by the VA, and charges for credit reports.

Other typical closing costs include title insurance, recording fees, and prepaid expenses like property taxes and hazard insurance premiums. While buyers are responsible for these costs, the VA allows sellers to contribute to the buyer’s closing costs, including the VA Funding Fee, up to a limit of 4% of the home’s reasonable value.