The VA funding fee is a closing cost added to VA loans that goes towards insuring VA home loans. Â It is like the VA's version of up front mortgage insurance. Â Here are some facts about the VA funding fee:
- The VA funding fee is 2.15% for first use of VA home loan benefits and 3.3% for subsequent use
- With 5% down payment the funding fee can be lowered to 1.5% for first use or subsequent use
- With 10% down the funding fee can be lowered to 1.25% for first use or subsequent use
- For Reservists the funding fee is 2.4% for first use and 3.3% for subsequent use (with 5% down the funding fee goes down to 1.75% for reservists)
- The funding fee is rolled into the loan balance. Â It does not have to paid at closing, but the borrower can choose to pay it if they like.
- For VA IRRRL streamline refinance the VA funding fee is .5%
- If a veteran recieves any disability pay (for service connected disability) the funding fee is waived.
- If a veteran has applied for a service connected disability but has not received it yet bit still wants to go forward with a VA loan, the VA funding fee will be refunded after a service connected disability is established
- The VA funding fee is tax deductible (verify with your CPA), the IRS treats the funding fee the same way it treats mortgage insurance
I hope this helps active military and veterans learn more about the VA funding fee that is part of their VA home loan benefits. Â VA loans are a tremendous benefit for active military and veterans offering low 30 year fixed rate 100% financing home loans with no monthly mortgage insurance. Â Don't hesitate to call at 858-922-7899 or email at email@example.com if you have any questions related to VA home loans in California.Rob Chomentowski
Sr. Loan Officer (and VA specialist)