How Much is the VA Loan Funding Fee?
VA home loans are funded in part by taxpayer dollars, but also by the VA loan funding fee which the buyer pays as part of the cost of the VA home loan. Some buyers are exempt from paying the VA funding fee, but most VA loan applicants are not. How much should a VA borrower expect to pay?
The answer isn’t as simple—there’s no set dollar amount–only percentages of the loan amount, which of course will vary depending on the cost of the home and other factors. Unfortunately there’s no single percentage, either, because the VA funding fee varies depending on several factors including whether the VA loan is a buyer’s first one, whether or not a down payment is to be made, or if the buyer is a member of the Guard or Reserves.
Those who don’t make any down payment tend to pay higher VA loan funding fees—2.15% of the total loan amount for a first time VA loan applicant approved for a no-money-down loan. For those who choose to put at least five percent down, the VA loan funding fee drops to 1.5%, and the amount goes even lower for those putting 10% down.
The good news for first-time home buyers already beginning to worry about how they’ll come up with the VA loan funding fee is that the VA allows the buyer to build the cost of the VA loan funding fee into the loan—in the case of a first home purchase or even a second home purchase with a VA home loan, the buyer has the choice of paying the fee up front or financing it. Those considering paying the fee up front rather than financing it should know the lender is required to submit the fee within 15 calendar days of the loan being closed.
VA funding fees are not standardized—construction loans have a different VA funding fee percentage, and so do refinancing loans guaranteed through the VA. We’ll cover those topics in another blog post.