The VA loan is a mortgage option for eligible Veterans, offering benefits such as mortgage financing with no down payment and no monthly mortgage insurance. In exchange for these benefits, VA loans require a VA Funding Fee.
What Is The VA Funding Fee?
The VA Funding Fee is a one-time cost collected by the Department of Veterans Affairs. It is a one-time fee to help offset the risk the VA assumes by guaranteeing the loan. This fee keeps the VA loan program running and accessible for future borrowers. There are instances where this fee can be waived/reduced if the veteran borrower has the appropriate disability rating.
The VA funding fee is either paid at closing or rolled into the loan amount. If you receive a Lender, Seller, and or Realtor credit, it can be applied towards the funding fee as well.
How Much Does the Funding Fee Cost?
The amount depends on the following factors:
- First-time use of a VA loan compared to using the VA loan program again
- Down payment amount
- Purchase, refinance, or IRRRL
VA funding fees range from 0.5% of the loan amount on an IRRRL and up to 3.3% of the loan amount for subsequent use on a purchase or refinance.
Who Doesn’t Pay the Fee
The funding fee is waived for the following individuals, regardless of the other factors:
- Veterans with a VA disability rating
- Surviving spouses of Veterans who passed away in service or from service-related causes
The VA funding fee keeps the program sustainable and gives Veterans access to attractive home financing. For questions or guidance, call Bluefire Mortgage Group at (760) 930-0569.
