VA Loan Funding Fees
In an effort to defray the cost of administering the VA Home Loan Program, nearly all borrowers taking out a VA Home Loan are charged a funding fee. It is a one-time fee for the loan and is not refunded once the loan has been completely paid off. The funding fee can be paid upfront or financed into the loan, which tends to be the preferred method. Funding fees are charged as a percent of the loan, ranging from 0.5% to 3.3%. There are a number of variables that determine what percent of the loan amount the fee will be. These include:
- Whether the borrower was a member of the Regular Military or part of the Reserves or National Guard
- If the borrower is a first-time user of the VA Home Loan Program or a repeat user
- The amount of the down payment
A first-time VA Home Loan borrower who is a regular Military veteran with a zero down payment loan will pay a 2.15% funding fee. For a $100,000 loan the amount would come out to be $2,150. As previously mentioned, the borrower can either pay this up front or have it added into the loan, bringing the total loan amount to $102,150.
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There are three situations where the fee is waived for the borrower. The funding fee may be waived if the borrower is receiving VA compensation for a service-connected disability. It may also be waived if the borrower would be receiving VA compensation if they didn't receive retirement pay. Lastly, the fee is waived for the surviving spouse of a veteran who either died in service or from service-connected disabilities. Your lender will be able to explain what forms must be shown to receive this waiver.
Before a VA loan can be used to purchase a home a VA appraisal must be done. This must be done by an approved VA appraiser. If the veteran would like the value of the home reconsidered, he or she can also pay to have a second appraiser look at the property. However, according to VA regulations, a borrower may not pay for an appraisal reconsidering the value requested by the lender or the seller, or for an appraisal requested by anyone other than the borrower or the lender. The veteran also may have to pay for a VA compliance inspection and/or survey of the property.
Other costs to borrowers include (but are not limited to) fees for loan origination (1% of the total amount), recording, title search, title insurance, and flood zone determination. Be sure to check with your lender for a complete explanation of all costs associated with a VA home loan. It's important to remember that along with things the borrower will need to pay, VA loans have a number of special regulations pertaining to specific things that the borrower cannot be made to pay.
See a related article: VA Loan Guidelines Explained
VA LOAN SPECIALISTS
We are the online VA loan specialists. It is our goal to ensure that your VA home loan process goes as smoothly as possible. Let us help you get the process started today online, or call us at 800-405-6682.
HAVE A QUESTION?
If you need advice concerning Veteran Home Loans, feel free to contact a VA mortgage specialist online or call 800-405-6682. Specialists can help determine whether a Veteran Home Loan is the best financial decision for you.
