The VA Funding Fee is a fee collected on VA loans to offset the government's costs in guaranteeing VA loans. No taxpayer funds are used, as the program is self-funding. Funding fees are calculated as a percentage of the loan amount and vary depending on loan type, entitlement status, and down payment, if applicable. The range of fees is from 0.5% to 3.3%. A few points:
*Service disabled veterans are normally exempt from the funding fee. There is no minimum disability percentage. Purple Heart recipients are also exempt.
*A Down payment of 5.0-9.99% reduces the fee to 1.50%. 10% or larger down payment reduces the fee to 1.25%. These discounted fees apply to both first time and subsequent use.
*First use funding fee is 2.15%
*Subsequent use is 3.3%
*The fee for the Interest Rate Reduction Refinance Loan (IRRRL) is 0.5%. This is a no cash-out rate and/or term reduction loan.
*The funding fee can be rolled into the loan, giving you an LTV of up to 103.3%
*The funding fee can be covered by seller concessions. However, total seller concessions may not exceed 4% of the purchase price. Most often, borrowers will roll the funding fee in to have seller concessions pay for most or all of closing costs.
Call me with any questions. John Wallace NMLS #2014743 (360) 771-1914 Amerifund Home Loans NMLS #347051 is an Equal Housing Opportunity lender.
