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The VA Loan Funding Fee

Veterans who actually obtain VA-backed loans are required to shoulder a small part of the cost of providing them with a VA-backed mortgage loan.  This is done through a charge called a VA Loan Funding Fee.

Personally, I think that the VA Loan Funding Fee is totally inappropriate.  But, what do I know?  You risked your life and limb and possibly your family’s stability and well being for your country and I think the U.S. Government should pick up all fees.  If you agree, write to  your congressman or senator and express your point of view!

The information contained in this article is as it was when we obtained the information on October 22, 2011.  It will be updated as appropriate to keep the information current.  Ultimately, the Veterans Administration has the final say on all the rules.

Quick Overview

In general the current VA Funding Fee is 1.4% of the amount borrowed for Veterans who are using their VA Loan Benefits for the first time who make no down payment.  All subsequent uses of your VA Loan benefits will cost you 2.8% of the amount borrowed with no down payment.

Please refer to the appropriate section below to read the rules for your particular service classification and/or situation.

Regular Military VA Loan Funding Fees

If you are/were a member of the U.S. Armed Forces you will be charged VA Loan Funding Fees as follows:

First-Time Use Of Benefits

  • First Time Use of Benefits with 0% thru less than 5% Down Payment – The VA Loan Funding Fee is 1.40% of the amount financed.
  • First Time Use of Benefits with 5% thru less than 10% Down Payment – VA Loan Funding Fee is 0.75% of the amount financed.
  • First Time Use of Benefits with a 10% Or More Down Payment – VA Loan Funding Fee is 0.50% of the amount financed.

NOT First-Time (i.e. Subsequent) Use Of Benefits

  • Subsequent Use of Benefits with 0% thru less than 5% Down Payment – The VA Loan Funding Fee is 2.8% of the amount financed.
  • Subsequent Use of Benefits with 5% thru less than 10% Down Payment – VA Loan Funding Fee is 0.75% of the amount financed.
  • Subsequent Use of Benefits with a 10% Or More Down Payment – VA Loan Funding Fee is 0.50% of the amount financed.

Reserves and National Guard VA Loan Funding Fees

If you are/were a member of the U.S. Armed Forces’  Reserves or National Guard you will be charged VA Loan Funding Fees as follows:

First-Time Use Of Benefits

  • First Time Use of Benefits with 0% thru less than 5% Down Payment – The VA Loan Funding Fee is 1.65% of the amount financed.
  • First Time Use of Benefits with 5% thru less than 10% Down Payment – VA Loan Funding Fee is 1.00% of the amount financed.
  • First Time Use of Benefits with a 10% Or More Down Payment – VA Loan Funding Fee is 0.75% of the amount financed.

NOT First-Time (i.e. Subsequent) Use Of Benefits

  • Subsequent Use of Benefits with 0% thru less than 5% Down Payment – The VA Loan Funding Fee is 2.8% of the amount financed.
  • Subsequent Use of Benefits with 5% thru less than 10% Down Payment – VA Loan Funding Fee is 1.00% of the amount financed.
  • Subsequent Use of Benefits with a 10% Or More Down Payment – VA Loan Funding Fee is 0.75% of the amount financed.

VA Refinance Loans – All Branches/Classifications Of Service

There are also funding fees for VA-backed Refinance Loans.  Here they are:

Interest Rate Reduction Refinance Loans

There is a flat, VA Loan Funding Fee of 0.50% of the amount financed.

Manufactured Home Loans (House Trailers, Modular Homes, Etc.)

The VA Loan Funding Fee is a flat, 1.00% of the amount financed.

Cash Out Refinance Loans – Regular Military

  • First Time Use of Benefits – The VA Loan Funding Fee is 1.40% of the amount financed.
  • Subsequent Use of Benefits – The VA Loan Funding Fee is 2.8% of the amount financed.

Cash Out Refinance Loans – Reserves and National Guard

  • First Time Use of Benefits – The VA Loan Funding Fee is 1.65% of the amount financed.
  • Subsequent Use of Benefits – The VA Loan Funding Fee is 2.8% of the amount financed.

Exemptions

All Exemptions from VA Loan Funding Fees require the approval of the Veterans Administration.  Their decision is final so far as I know.

The Exemptions from VA Loan Funding Fees are as follows:

  • Surviving spouses of veterans who died from service-connected injuries or disabilities.  This is separate and apart from the benefits of the surviving spouse.
  • Veterans who are receiving VA compensation for service-connected disabilities.
  • Veterans who are receiving retirement pay in lieu of receiving VA compensation for service-connected disabilities that they are qualified to receive.

Hope that helps.  It’s everything I know about VA Loan Funding Fees.