What You Need to Know About the Funding Fee for a VA Loan
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If you’re a veteran looking to take out a VA loan, you’ll need to pay a funding fee. Here’s what you need to know about this fee and how it works.
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Introduction
The Funding Fee is a one-time fee paid by all Veterans who have not previously paid the fee, and is generally financed into the loan. The amount of the funding fee varies depending on factors such as
– whether it is the Veteran’s first VA loan
– whether the Veteran is making a down payment
– and whether the Veteran (or the Veteran’s spouse) receives certain types of disability benefits.
For more information on these factors, see How Much Is the Funding Fee?
Veterans with service-connected disabilities are exempt from paying the funding fee.
What is the funding fee?
The funding fee is a percentage of the loan amount that is paid to the Veterans Administration (VA) to help cover the costs of the loan program. The fee varies depending on factors such as whether you are a first-time or subsequent loan user, the type of service you have rendered, and whether you make a down payment. For most borrowers, the fee is added to the loan balance and spread out over the life of the loan.
How is the funding fee calculated?
The funding fee is a percentage of the loan amount which varies based on the type of loan, whether it’s a first-time or subsequent loan, and whether money is down. The funding fee for first-time users with no money down is 2.15 percent. For subsequent users with no money down, it’s 3.3 percent. For first-time users with money down, it’s 1.25 percent and for subsequent users with money down it’s only 1.5 percent.
How can I pay the funding fee?
The funding fee for a VA loan can be paid in cash at closing, or it can be included in your loan amount. If you finance the funding fee, your lender will add it to your loan balance, and you’ll make payments on it as part of your monthly mortgage payment.
What if I can’t afford the funding fee?
If you are unable to afford the funding fee, you may be able to roll the fee into your loan amount. This will increase your loan balance and monthly payments, but may be a good option if you are otherwise eligible for the loan. You may also be exempt from the funding fee if you are receiving disability benefits from the VA.
Conclusion
In conclusion, the funding fee for a VA loan is a percentage of the loan amount that is charged by the Department of Veterans Affairs to help cover the costs of the VA loan program. The fee can be paid in cash at closing or added to the loan amount and financed over the life of the loan.
