Chris Andaya
Greetings from The Veteran Lending Team, your dedicated military veterans here to help American veterans and their families in understanding and navigating the VA home loan process. We’ve been in your shoes, and our mission is to make sure you’re well-equipped with the necessary knowledge to make informed decisions about your home financing journey. Today, we’re going to demystify the VA funding fee – an essential component of the VA home loan program.
Understanding the VA Funding Fee
The VA funding fee is a one-time, upfront charge that the Department of Veterans Affairs (VA) requires from borrowers to help fund the VA home loan program. This fee helps the program remain sustainable, allowing the VA to continue providing home loans to eligible veterans, active-duty service members, and surviving spouses without requiring a down payment or mortgage insurance.
The funding fee varies based on several factors, including the type of military service, down payment amount, and whether you’re a first-time or subsequent user of the VA loan program. It’s important to know that the VA funding fee is not a profit center for the VA or lenders – it goes directly back into the program to cover the costs of loans that default, ensuring the program’s continued viability.
Calculating Your VA Funding Fee
To calculate the VA funding fee for your situation, you’ll need to consider three factors:
- Your military service type – Regular military, Reserves, or National Guard.
- Your down payment amount – The funding fee is reduced if you choose to make a down payment.
- First-time or subsequent use – The funding fee is higher for subsequent use of the VA loan benefit.
As of 2023, the VA funding fees for various scenarios are as follows:
Purchase loans:
- No down payment: 2.15% for first use, 3.3% for subsequent use
- 5% or more down payment: 1.5%
- 10% or more down payment: 1.25%
Refinance loans:
- Cashout refinance: 2.15% for first use, 3.3% for subsequent use
- VA Interest Rate Reduction Refinance Loan (IRRRL): 0.5%
VA Funding Fee Exemptions
It’s important to note that some veterans and service members may qualify for an exemption from the VA funding fee. You might be exempt if you:
- Receive VA disability compensation for a service-connected disability.
- Are a surviving spouse of a veteran who died in service or from a service-connected disability.
- Are an active-duty service member who has received a Purple Heart.
Navigating the VA Funding Fee with The Veteran Lending Team
The Veteran Lending Team is committed to helping you every step of the way during your VA home loan journey. We will work with you to determine your VA funding fee and ensure you’re aware of any exemptions that may apply to your situation. Our team of military veterans is dedicated to providing expert guidance, ensuring a smooth and hassle-free experience tailored to your unique needs.
Understanding the VA funding fee is crucial for veterans, active-duty service members, and their families considering a VA home loan. This fee helps to sustain the program and provide affordable homeownership opportunities for those who have served our country. If you have questions about the VA funding fee or the home loan process, The Veteran Lending Team is here to help. We’re proud to serve those who have served and are committed to making your home financing journey a success.
