Tips & Special Topics
The VA Funding Fee: What and how much is it?
Added December 30, 2011 | Updated December 30, 2011
Many VA borrowers inquire about the VA funding fee. The VA funding fee, unless waived, is required by law on all VA loans and can run between .5 and 3.3% depending on the circumstances (see table). The VA funding fee can be rolled into the loan as long as the total loan amount does not exceed the conforming loan limit. Also, the fee can be added to seller-paid closing costs. Remember, seller is allowed to pay VA borrower closing costs up to 4% of the total loan amount.
Persons who may be exempt from paying the VA funding fee include:
• Surviving spouses
• Disabled veterans
Survivors whose spouses died while on duty or as a result of a duty-related injury are likely exempt from the fee. And, military persons who are disabled as a result of injuries obtained during their service may also receive a VA funding fee waiver.
For most types of VA mortgages, the fee is lower for first-time than for subsequent use. However, for
VA loan assumptions, whether entitlement is replaced or not, the fee is just one-half of one percent for first-time and subsequent use. For Interest Rate Reduction Refinancing Loans, or Streamlines, the fee is also .5% for first and repeat home loan benefit users. Finally, for VA loans on manufactured homes (not permanently affixed) the fee is 1% whether the borrower is a first-time or subsequent user. Not all VA-approved lenders will originate loans for manufactured homes.
To find out more about the VA loan fee required by law, ask a Loan Professional.
