14 Jul VA Loan Refinance: When Is the Funding Fee Refundable?
VA Home Mortgage Refinancing: exemptions from the funding fees
When you refinance your home loan with either the Cash-Out Refinancing or the Interest Rate Reduction Refinance Loan (IRRRL) program, you are required to pay a funding fee at the time of closing. This fee helps mitigate some of the expenses associated with the VA Loan program. You may choose to pay this fee at the closing of the loan or have the fee amount rolled into your VA Mortgage.
The funding fee can range from 0.5 percent with an IRRRL or Streamline loan to 3.3 percent with the Cash-Out refinance program. For example, if you are refinancing and your first VA Mortgage was for a manufactured home that was not attached to a foundation, your standard or Cash-Out funding fee is only 1 percent of the financed amount.
The amount you pay may also vary depending on whether your status is regular military, National Guard, or Reserves; and if you pay a down payment.
How can you become exempt from paying a refinancing funding fee?
There are a handful of situations where a VA Loan borrower who is refinancing their mortgage may qualify to have their funding fee waived. Here are the scenarios:
- If you are receiving benefits for a disability (service-related)
- If you are not receiving VA disability benefits but would if you were not receiving active duty pay
- If you would receive VA disability benefits but are receiving military retirement pay instead
- If you were determined to be eligible for VA disability benefits after completing a pre-discharge rating and exam
- If during your pre-discharge review, your medical records were reviewed and it was determined you were eligible for disability compensation and rating
- If you are the spouse of a military member who passed away in a service-related incident or died due to a service-related disability. This is even if you yourself are a service member or veteran and have your own VA benefits and even if you are using your VA Loan benefits
What if you receive exemption after closing?
If you have not yet been approved as exempt from paying a funding fee at the time of closing, you must pay it. In the event that you are determined to be exempt after your VA refinancing has closed, it is possible to receive a refund of the fee.
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Just to see how beneficial it is for you to attempt to receive exemption from the funding fee, here’s an example of what it might look like: refinance loan amount = $250,000, funding fee of 3.3 percent = $8,250. It’s definitely worth it to go after that refund if you are declared eligible for exemption.
If you are eligible, how do you go after your refund?
In the event that you are determined to be exempt from your IRRRL or Cash-Out refinance loan funding fee after the loan has already closed, you will want to apply to for a fee refund with your VA Regional Loan Center, once your approval for exemption has gone through. If you decided to have your funding fee rolled into your loan, the fee will be credited toward your loan. If you opted to pay cash for your funding fee, you will receive a cash refund.
To request quotes, ask questions about funding fees, or to learn more about the refinancing process with a VA Home Loan, contact one of the qualified lenders in our network.
NatePosted at 23:40h, 20 January
The Mortgage company gave me the funding fee as a credit on a cash out refi and I am not eligible, Now I have to contact them to send the money back.
Michael HoodPosted at 16:12h, 06 December
I just started the process of underwriting a VA IRRL and applied for VA disability in Oct 2020. My DAV review estimates I’ll receive a 50-70% rating. How do I get my funding fee waived before the loan closes?
PhilipPosted at 04:32h, 28 April
My Uncle has a VA Loan. I’ll share this to him. I think that he will find this very helpful too. Thanks for sharing this article.
Factoring FinancePosted at 01:49h, 21 April
My father has a VA loan. I think that this article is very helpful for him. I’ll definitely share this to him. I think that this will help him to avoid issues or problem. Thanks for sharing this article.
NCFFPosted at 10:20h, 18 March
I want to become exempt from paying a refinancing funding fee.This article will definitely help me. I’ll follow what you said here. This is a very helpful article.
Business Working CapitalPosted at 09:42h, 09 March
Thanks for sharing this article. We are interested to get VA Loan.This article gives me a lot of ideas about it. I’ll definitely return to this very helpful site.
Debtor Debtor FinancePosted at 01:24h, 10 January
Great article. This is very helpful to avoid issues regarding VA Loan Refinance. This is a very helpful article and very comprehensive. Thanks for sharing this article.
MikePosted at 14:01h, 30 September
I am retiring in 3 mos. We are currently buying a home in the town I’ll retire to. I know that i will get a rating. Per the above, I am not (currently) getting benefits bc I am still receiving active duty pay- as per above. that said, the guy on the phone said i wouldn’t be eligible to get a rebate bc I am buying a home while on Active Duty. Anyone else have any experience with this scenario?
JimPosted at 23:11h, 19 February
I believe that your current loan servicer will need to work with the VA. They should be able to submit a refund request through the FFPS (funding fee payment system). Once completed, a determination is due back from the VA within 10 days. Here’s a link to the VA manual with more information about processing the refunds (section 2.f. has specific information about the process): https://www.benefits.va.gov/WARMS/docs/admin26/m26_01/M261_Chapter%203%20-%20Fees%20and%20Charges%20Paid%20by%20the%20Borrower%20FINAL.docx
Hope this helps, good luck!
HughPosted at 15:33h, 11 October
It is a hassle to get your funding fee back after you paid it and then get your disability rating. I have been trying to get both of mine back for over three years. VA says the mortgage company needs to send a letter to VA. Mortgage company says that I need talk to VA. No one will budge. Now Mortgage company says settlement attorney has to do it????? What??? Feels like I am back in government office ugh.
Michael B BrownPosted at 16:23h, 23 May
I’m trying to contact the VA about a refi policy that states (haven’t seen it, but i’m being told this by the appraiser and Navy Federal loan agent) that I am REQUIRED to have flooring in my house? This is why I need to speak to someone at the VA quickly. I close in 2 weeks and I need to settle this now.
VA.org EditorPosted at 21:08h, 23 May
Check here: https://www.benefits.va.gov/homeloans/contact.asp for contact info.