How Much is the VA Funding Fee?
There are two main benefits to a lender when issuing a VA mortgage loan. The first being able to offer such an attractive program at all and second it’s the guarantee the VA lender receives from the Department of Veteran’s Affairs. The VA guarantees 25 percent of the VA loan amount to the lender should the loan ever go in to default. Conventional loans don’t have that protection. This guarantee is issued to the lender only after the lender certifies the loan was approved using current VA loan approval guidelines.
The pool of funds used to finance the guarantee program is funded with the Funding Fee. The funding fee on a VA loan is expressed as a percentage of the loan amount and may be rolled into the loan and not paid for out of pocket. The veteran certainly may pay the funding fee out of pocket but few, if any, actually do. How much is the VA funding fee?
That depends upon the type of the loan and the status of the borrower as well as whether or not the veteran has used the entitlement before.
For first time use and the borrower is a veteran or qualified active duty member, the fee is:
Down Payment Funding Fee
< 5 % 2.15%
5% to 9.99% 1.50%
10.00% and up 1.25%
Under the same scenario, if the borrower is a qualified Reservist or National Guard member, the fee is:
Down Payment Funding Fee
< 5 % 2.40%
5% to 9.99% 1.75%
10.00% and up 1.50%
The least expensive form of the funding fee is reserved for the VA’s Interest Rate Reduction Loan for veterans and active duty members and is 0.50% of the loan.
The proper funding fee is applied, and then rolled into the loan to determine the borrower’s final VA loan amount.
