28 Dec How Much Is The VA Funding Fees & Can You Be Exempted From It?
VA loan funding fees are administrative fees added to most VA mortgages. First-time buyers with no down payment are charged a 2.3% funding fee, while repeat VA borrowers can pay up to 3.6 percent. The fee is usually rolled into the loan balance, so the borrower does not have to pay it upfront.
VA Funding fees support the VA loan guarantee program so future veterans and military service members can access these low-cost mortgages. Therefore, VA home loans offer some of the best benefits in today’s market, including low-interest rates, no private mortgage insurance, and no down payment.
When it comes to VA funding, how much does it cost?
Funding fees vary depending on the loan amount, but not all loans require the same percentage. A VA refinances cost ranges between 0.5% (for an IRRRL refinance) and 3.6 percent (for a repeat VA borrower using a cash-out refinance).
VA funding fees are determined by several factors, including:
The purpose of the loan (refinance, cash-out refinance, home purchase, etc.)
Type of home
- Down payment amount
- No matter if you’ve used a VA loan before
- Some veterans do not have to pay the VA home loan funding fee.
VA loan fee exemptions
All veterans are not required to pay VA funding fees, and a service-related injury exempts a veteran from receiving VA disability compensation.
Here is a complete list of VA funding fee exemptions:
Veterans receiving VA compensation for service-related disabilities
The veteran is entitled to VA compensation for a service-connected disability but receives retirement pay or active duty pay instead. Veteran’s surviving spouse or child who died in active service or from a service-connected illness.
Because VA-authorized lenders can set their rates, homebuyers should compare quotes from three or more lenders. When comparing rates, ensure each section includes the same loan terms, discount points, and amount.
VA loans enable mortgage lenders to offer more attractive mortgage rates, eliminate down payment requirements, and consider borrowers with lower credit scores without worrying about defaults.
If you’re eligible for the VA home loan benefit, you’ll need a Certificate of Eligibility (COE). Your COE can be obtained within minutes by VA lenders.