VA Funding Fee

The VA Funding Fee is a financed charge assessed by the Department of Veteran's Affairs in order to help fund the VA Loan Guarantee program.  The funding fee varies according to the type of transaction and is calculated as a percentage of the base loan amount on all VA home loan transactions.

In layman's terms the VA funding fee is a fee that the Department of Veteran's Affairs charges on each loan so that the VA can generate enough revenue to maintain the existence of the VA home loan program.  Banks are willing to issue VA loans at 100% LTV with no money down and also offer lower interest rates because the Department of Veterans Affairs guarantees a portion of the loan to the bank.  This guarantee reduces the financial risk the bank or mortgage lender has when issuing VA loans.  Other non-VA loans require money down, mortgage insurance or PMI in order to reduce the risk.  Again, in summary the VA funding fee is a small price to pay for the numerous benefits offered to veterans via the VA home loan program.

 

First time use, purchase of an eligible property
Down Payment Active Duty Reserves/NG
0% to 4.99% 2.2% 2.4%
5% to 9.99% 1.50% 1.75%
10% + 1.25% 1.5%
   

 

Second time use, purchase of an eligible property
Down Payment Active Duty Reserves/NG
0% to 4.99% 3.3% 3.3%
5% to 9.99% 1.50% 1.75%
10% + 1.25% 1.5%

Other Loan Types:

Manufactured Home Loans: 1.00%

Loan Assumptions: .50%

Cash-out Refinance: 3.3% Funding Fee

Streamline Refinance (IRRRL): .50% Funding Fee

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