Any Veteran that ever uses a VA Home Loan will pay a VA Funding Fee. There are exceptions to this which we will cover shortly.
Simply stated, the VA Funding Fee is fee required to reduce the loan’s cost to taxpayers by making Veterans contribute towards the cost of using the his or her VA Home Loan benefit.
Typically the VA Loan Funding Fee is paid one of 3 ways…
- Financed into the loan
- Paid for out of pocket
- Paid by the seller
In my experience most Veterans have opted to finance the fee into their loan amount so they can avoid paying it out of pocket.
How Much is the VA Funding Fee?
Let’s talk about how much this fee will cost you, the Veteran. For a first time user the VA Funding fee is typically 2.15% of the loan amount.
However, for a first time user that happens to be a Reservist or National Guard, the fee goes up slightly, to 2.4%.
Anybody that has used a VA Home Loan more than once is considered a subsequent user and is subjected to a higher fee. For these Veterans using a VA Home Loan for a second time or more are required to pay a 3.3% fee.
How to Reduce the VA Funding Fee
There are ways to reduce the VA Funding Fee or possibly not pay it at all.
To reduce the fee the Veteran has the option of putting anywhere from a 5%-10% down towards the purchase of their home.
- With as little as 5% down, the fee will be reduced to 1.5%.
- With 10% down the fee will be reduced to 1.25%.
As you can see the VA encourages Veterans to put money down towards the purchase of their home if they are able.
VA Funding Fee Waived for Disabled Veterans
For Disabled Veterans, meaning you are have a service connected disability from the VA, and are as little as 10% rated, your fee is waived.
Needless to say if you are a Veteran and have this benefit, it can literally save the you tens of thousands of dollars over the life of the loan.
Keep in mind you must prove this to your lender in order for it to be waived. To do so, simply provide a copy of your VA service connected disability paperwork to the company originating your VA Home Loan to get the fee waived.
Fore more information about the VA Funding Fee and your VA Home Loan please click on the link below and fill out an application and we can follow up with you shortly thereafter.