VA Funding Fee is a fee VA charges to non exempt veterans using a VA home loan. The fee helps insure the VA home loan program and is typically financed into the veteran’s VA loan amount.
VA Funding Fee on VA Home Loan
A VA Funding Fee is an insurance premium charged by the VA to most veterans who use a VA home loan. In fact the VA funding fee is charged on the following VA mortgage transactions:
- Cash out refinance
- VA Streamline (IRRRL)
- Loan Assumption (VA to VA)
The table below lists out what the funding fee rate is for each different VA home loan transaction. These rates were updated from longstanding rates effective January 1, 2020.
Thanks to the VA Funding Fee, the VA home loan program remains solvent and available to veterans. This fee is in essence, the same as what other loan types call “mortgage insurance”. VA’s funding fee helps protect lenders in the event of a VA loan default.
VA Funding Fee – How Much is it?
Specifically, the VA Funding Fee amount charged to a veteran depends on several factors. In fact, the VA funding fee amount is impacted by following:
- Level of service
- Transaction type (purchase or refinance)
- Number of uses of VA loan
- Disability status with VA
- Down payment amount
Exemption from VA Funding Fee
In addition to the rates listed in the above Funding Fee Rate Table, veterans rated as disabled with the VA are exempt from the funding fee. In other words, a 0% funding fee is charged to exempt veterans in all VA home loan transactions and scenarios.
Refer to the VA Funding Fee Rate Chart to see how much your fee would be.
New VA Funding Fee Rates
|VA Loan Type||Down Payment||Funding Fee|
First Time Use
|Purchase||5% to 9.99%||1.65%||1.65%|
|Purchase||10% or more||1.4%||1.4%|
|Cash Out Refinance||N/A||2.3%||3.6%|
|VA Streamline (IRRRL)||N/A||.5%||.5%|
Sample Funding Fee Calculation
Determining your VA Funding fee total is simple. In fact, it takes just 3 steps to figure the total cost of your VA Funding Fee.
- VA Base Loan Amount
First, determine your VA Loan amount. Whether on a purchase, cash out refinance or VA Streamline (IRRRL), figuring out your loan amount is step 1.
- VA Funding Fee
After step 1, determine your VA Funding Fee Rate. Exempt veterans use 0% as your funding fee rate.
- Do the Math
Next, simply multiply your VA base loan (step 1) amount by your VA Funding Fee Rate (step 2). For example:
$450,000 (VA base loan) X 2.60% (Va Funding Fee Rate) = $11,700 VA Funding Fee Total
How a VA Funding Fee is Paid
Most commonly, veterans pay their funding fee by financing it into their VA home loan. However, the VA allows the fee to be paid in part or in full in the following ways:
- Finance fee into VA loan
- Veteran pays cash for fee
- Seller (on purchase transactions) pays for fee
- Lender pays for fee
Team Phone: 602.435.2149
Team Email: Team@JeremyHouse.com