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VA Loans and VA Funding Fee

Updated: Apr 1, 2019

VA loans can be a great option for eligible service members, veterans, and reservists.  VA loans are attractive for a few reasons: 

No down payment requirements (unless loan amount exceeds VA county loan limit)

Competitive interest rates

No monthly mortgage insurance

Reduced closing costs 

Lenient credit and income requirements compared to conventional loans

Something that is unique to VA loans is the “VA Funding Fee”.  The VA Funding Fee helps to offset the cost of administering the loan since VA loans are paid for both by the government and taxpayer dollars.  It also helps to ensure that the loan continues to require no down payment and no monthly mortgage insurance. 

Know that this fee is a one-time only fee that can be financed into the loan amount, which will reduce your out-of-pocket closing costs.  The amount of the fee is determined by a number of factors, including your military status, loan-to-value ratio, and type of loan (i.e. purchase, cash-out refinance, non-cash-out refinance).  Whether you’re a first time or subsequent user of the benefit will also affect the amount of the fee.  However, there are some instances where the VA Funding Fee is waived: 

You receive VA disability

You are eligible to receive VA disability, but have been re-enlisted or recalled to active duty

You are eligible to receive VA disability, but receive retirement benefits instead

You are eligible to receive VA disability as a result of a pre-discharge exam and rating

You are a surviving spouse of a veteran who died in service or from service-connected disabilities 

To learn more about VA loans and the VA funding fee, or to see if you qualify, give us a call today. We’d be happy to help you out. 

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