Curious how others handle broker compensation for VA loans. If I understand the VA Lender's Handbook correctly broker fees are on the list of "unallowable" fees. But lenders can charge the veteran up to 1% of the loan amount in unallowable fees as long as the lender does not charge an Origination fee. In other words a lender can either charge the veteran a 1% origination fee or can charge up to 1% in unallowable fees.

It is also my understanding that for lender-paid broker compensation the lender cannot pay for the compensation by charging the veteran a premium rate. In other words the lender cannot add the lender-paid broker compensation to the pricing of the loan so the veteran pays a higher interest rate. Premium pricing is acceptable to pay allowable fees, but is not acceptable to pay unallowable fees.

So those of you that do broker VA loans do you limit both borrower-paid and lender-paid broker compensation to 1%? I am interested to hear how others handle this.

I think you are confusing the prohibition on the vet paying a real estate broker commission and any payment to a mortgage broker, which would have to be approved by the VA as they would be acting as an agent of the lender. Any compensation paid to the agent would have to come from the lender's allowable charge.