*Please note that effective April 3, 2020, we are no longer able to accept loans from applicants with a credit score below 640.  Please visit our friends at My Credit Guy for help improving your credit score.

A VA loan is an excellent option to buy a home. It lets you get into a house without making a down payment. 

There’s one catch.

Most borrowers who take out a VA loan must pay a VA funding fee.

So now you’re wondering:

How much is it and do I have to pay?

The Cost of VA Funding & Do I Have To Pay It?

There’s good news: The fee is a one-time cost.

But it gets better.

You might qualify for a VA funding fee exemption or have your payment refunded.

Let’s dive into what the funding fee is and what it might cost you.

First, we recommend you get started with a free, quick quote by state:

WHAT IS THE VA FUNDING FEE?

A VA funding fee is something you pay when you buy a home with a VA loan

The fee goes directly to the Department of Veterans Affairs to help cover the cost of the program.

While most borrowers are charged, there are a few exceptions.

Plus, you might not have to pay it out of pocket.

That’s why working with a lender who understands VA loans is so important!

At the Wendy Thompson Lending Team, we’ve got your back.

We help you get the best deal on the right loan for your situation.

Which is why we’re telling you there’s more than one way to pay the funding fee:

  • - Upfront in cash as part of your closing costs
  • - Add the fee to your mortgage and pay it off over time

VA Home Loan Quote

HOW MUCH DOES THE VA FUNDING FEE COST?

Your credit score can impact your interest rate, but a funding fee is a percentage of how much you borrow.

But it isn’t a one-size-fits-all situation.

How much you’re charged depends on a few things. 

Your military status, if you have a down payment and how much, and whether you’ve used the loan program before are considerations.

Now, remember:

The VA loan program is an attractive option because it makes buying a home affordable. 

You can buy a house with no money down.

But here’s the thing.

Paying a down payment can lower the funding fee you’re required to pay.

Since buying a house is all about how much you can fit into your budget, buying with zero down makes more sense for some borrowers.

VA FUNDING FEE CHART

*Please note that effective April 3, 2020, we are no longer able to accept loans from applicants with a credit score below 640.  Please visit our friends at My Credit Guy for help improving your credit score.

The funding fee can be different in different situations.

Plus, the costs can change from time to time. 

New fees were established for VA loans closed on or after January 1, 2020.

Here’s a VA funding fee chart with what you can expect:

MILITARY SERVICE

DOWN PAYMENT

1ST TIME USE

SUBSEQUENT USE

Active Duty, Reserves & National Guard

0% to 4.99%


5% to 9.99 %


10% and up

2.30%


1.65%


1.40%

3.60%


1.65%


1.40%

Not everyone has to pay the funding fee, and we’ll cover that next.

VA FUNDING FEE EXEMPTIONS

Most borrowers will pay the funding fee.

But a few VA funding fee exemptions exist. 

According to the Department of Veterans Affairs, you may not have to pay the fee if:

  • - You have a service-connected disability and receive VA compensation
  • - You’re a surviving spouse of a veteran
  • - You’re on active duty and entitled to disability compensation
  • - You have a rating from the VA that says you’re eligible for disability pay because of a pre-discharge review
  • - You were awarded the Purple Heart

Now, having the funding fee waived is an excellent perk of the VA loan program.

But this is important…

Your funding fee exemption isn’t automatic.

If you think you qualify, let us know. The Wendy Thompson Lending Team will get you what you need to apply for a VA funding fee waiver.

VA Home Loan Quote

VA FUNDING FEE REFUND

If you pay a fee at closing or have it rolled into your loan balance, you might get that money back.

Let’s take a closer look at how that’s possible.

Paperwork from the VA isn’t always cut and dry.

If it wasn’t crystal clear that you were exempt from the funding fee at the time of closing, you might be able to sort through the situation afterwards.

For instance…

Let’s say you had a disability claim pending when you closed on your home purchase. 

In that case, you wouldn’t be exempt when you signed papers, but you can ask for a refund once your claim goes through.

But that’s not the only scenario.

If you think you’re eligible for a VA funding fee refund, contact your lender or reach out to your local VA office.

In the meantime, know this:

Most often, you’ll be expected to pay a VA funding fee when buying a house with a VA loan.

It can increase the cost of homeownership for veterans.

But we can help.

The experts at the Wendy Thompson Lending Team know the ins and outs of the VA loan program.

We’ll keep you informed with all the details, so there are no surprises at the last minute.

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