The Lender Can
The lender can offset part or all closing costs with a lender credit. Lenders can offer a credit to a borrower by adjusting the borrower's interest rate. It's like paying a point to get a lower interest rate but in reverse.
For example, a VA borrower applies for a 30 year fixed rate VA mortgage and is offered a 3.75 percent rate. The lender offers the buyer a lower rate if the buyer pays one point, or one percent of the loan amount. The choice is 3.75 with no points or 3.50 with one point.
In the other direction, the lender can offer 3.75 percent with no points and 4.00 percent with one point credit to the borrower. On a $200,000 loan, the lender can increase an interest rate by about one-quarter of one percent and the borrower gets a $2,000 credit toward closing fees.
The Borrower Can
The seller can pay, an agent can pay, the lender can pay but the borrower also has one more way to pay non-allowable closing costs. Recall that an origination fee is an allowable charge. An origination fee is represented as one percent of the loan amount.
In lieu of charging the borrower non-allowed fees, the lender can charge a one percent origination fee instead of itemized non-allowable charges for things such as attorney or underwriting charges.
Closing costs on VA loans are indeed a different breed compared to FHA or conventional loans, especially with regard to who is responsible for any particular fee. If there are any questions about who pays for what, those questions should be asked directly to your loan officer. VA costs can be confusing, there's no need for them to be.