VA Funding Fee

The VA has structured funding fees depending on a borrower’s military history, service related disabilities, down-payment, and prior VA loan history.

For military personnel with active duty history, the VA funding fee is currently set at 2.15% on a no down payment loan for a first-time use. This low interest rate is used to help first time buyers get into a home with a relatively low funding fee premium. The borrower is expected to use this opportunity to build up equity faster. If they use their eligibility a 2nd time then ideally they will have enough cash for a 5% down payment. The funding fee for second time users who do not make a down payment is 3.3%. But if you are able to put down 5%, you can get your funding fee reduced to 1.5%. If you are in a position to put down 10%, you will get the lowest funding fee available, which is 1.25% *

If the veteran was in either the Reserves or National Guard, the fee for first-time users with no down payment is 2.4%. A 5% down payment requires a 1.75% fee. With a 10% or more down payment, the VA requires a 1.5% fee. For subsequent use, no down payment requires a 3.3% funding fee. A 5% down payment requires a 1.75% fee, and 10% or more requires a 1.5% fee.*

On the streamline refinance program the funding fee is always reduced to 0.5%*. This low amount is another reason why the streamlined refinance (IRRRL) can be a very attractive to the veteran home owner.

The following persons are exempt from paying the funding fee:

• Veterans receiving VA compensation for service related disabilities. Generally, if the veteran is deemed 10% disabled or higher they will qualify for an exemption.
• Surviving spouses of veterans who died in service or from service related disabilities are exempt.

*Funding fees are set up by the Veteran’s Administration. For more information on VA Funding Fees, visit www.homeloans.va.gov/docs/funding_fee_tables.doc. Example: For $150,000 loan; 360 monthly payments of $809.26 are based on principal and interest only, and an annual percentage rate (APR) of 5.068%. APR is subject to borrower qualification and subject to change. Third party fees may apply.