For guaranteed loans, the law requires the borrower to pay the VA Loan Funding Fee. A veteran will be asked to pay this upfront during the final stage of the loan application process. Though VA home loans provide veterans a no-money-down benefit, a veteran is asked to pay the VA Funding Fee as a contribution toward the cost of this unique benefit. As a result, the VA Funding Fee reduces the cost to taxpayers.
For first time veteran borrowers, the fee is currently at 2.15% while second-time users who don’t want to make a down payment are asked to pay 3.3%. Why are second-timers asked to pay more? It’s pretty simple, these veterans have already taken advantage of the benefit in the past plus they have also had the time to save money to pay for a down payment.
Another important aspect of the VA Funding Fee that every veteran must know is that it can vary depending on the type of service rendered and whether the loan is a purchase, a streamline refinance or IRRL, or simply a cash-out transaction. The following charts show the details of the VA Funding Fee.
Type of Veteran
Down Payment
First Time Use
Subsequent Use for loans 1/1/04 to 9/30/11
Regular Military
None
5% – 10%
10% or more
2.15%
1.50%
1.25%
3.3%*
1.50%
1.25%
Reserve/National Guard
None
5% – 10%
10% or more
2.4%
1.75%
1.5%
3.3%*
1.75%
1.50%
Cash-Out Refinancing Loans
Type of Veteran
Percentage for First Time Use
Percentage for Subsequent Use
Regular Military
2.15%
3.3%*
Reserve/National Guard
2.4%
3.3%*
* The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home loan.
Type of Loan
Percentage for Either Type of Veteran Whether First Time or Subsequent Use
Interest Rate Reduction Refinancing Loans (IRRRL)
0.50%
Manufactured Home Loans
1.00%
Loan Assumptions
0.50%
Although almost all veteran home buyers pay the VA Loan Funding Fee, there are some exceptions to this:
http://nobsvaloans.com/2009/07/va-loan-funding-fee/
For first time veteran borrowers, the fee is currently at 2.15% while second-time users who don’t want to make a down payment are asked to pay 3.3%. Why are second-timers asked to pay more? It’s pretty simple, these veterans have already taken advantage of the benefit in the past plus they have also had the time to save money to pay for a down payment.
Another important aspect of the VA Funding Fee that every veteran must know is that it can vary depending on the type of service rendered and whether the loan is a purchase, a streamline refinance or IRRL, or simply a cash-out transaction. The following charts show the details of the VA Funding Fee.
Type of Veteran
Down Payment
First Time Use
Subsequent Use for loans 1/1/04 to 9/30/11
Regular Military
None
5% – 10%
10% or more
2.15%
1.50%
1.25%
3.3%*
1.50%
1.25%
Reserve/National Guard
None
5% – 10%
10% or more
2.4%
1.75%
1.5%
3.3%*
1.75%
1.50%
Cash-Out Refinancing Loans
Type of Veteran
Percentage for First Time Use
Percentage for Subsequent Use
Regular Military
2.15%
3.3%*
Reserve/National Guard
2.4%
3.3%*
* The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home loan.
Type of Loan
Percentage for Either Type of Veteran Whether First Time or Subsequent Use
Interest Rate Reduction Refinancing Loans (IRRRL)
0.50%
Manufactured Home Loans
1.00%
Loan Assumptions
0.50%
Although almost all veteran home buyers pay the VA Loan Funding Fee, there are some exceptions to this:
- Veterans with service-related disabilities who are receiving VA compensation
- Veterans with service-related disabilities who did not receive retirement pay but are entitled to receive compensation
- Surviving spouses of veterans who died while rendering service or from any service-related disabilities
http://nobsvaloans.com/2009/07/va-loan-funding-fee/
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