VA Loans and the VA Funding Fee

Posted 2 years ago

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

• No-down payment requirements (down payments are required if loan amount exceeds VA county loan limit)
• No monthly mortgage insurance
• Competitive interest rates
• Lenient credit and income requirements compared to conventional loans
• Reduced closing costs 

One feature that is unique to VA loans is the “VA Funding Fee”. Because VA loans are paid for both by the government and taxpayer dollars, the funding fee helps to offset the cost of administering the loan.  This helps to ensure that the loan continues to require no down payment and no monthly mortgage insurance. 

It’s important to note that the fee is a one-time fee that can be financed into the loan amount, hence reducing your out-of-pocket closing costs. The amount of the fee depends on a number of factors such as your military status, loan-to-value ratio, and type of loan (i.e. purchase, cash-out refinance, non-cash-out refinance). The fee will also vary if you’re a first time or subsequent user of the benefit. There are, however, some instances where the VA Funding Fee is waived: 

• You receive VA disability
• 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 eligible to receive VA disability, but have been re-enlisted or recalled to active duty
• You are a surviving spouse of a veteran who died in service or from service-connected disabilities 

We hope you find this information useful. Feel free to contact us to learn more about VA loans and the VA funding fee. 

-The Kavanewsky Team

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