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VA Loan Reader Questions: VA Loan Funding Fee Amounts For Second-Time Use

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A reader asks, “I am a Navy veteran. I purchased a home during the Spring of this year 2013. We paid a down payment of over 10% but were charged a funding fee of 3.30%. This was a second use of a VA Loan Guaranty. Should I have only been charged a 1.25% fee based on the down?”

VA loan rules specify that all borrowers who are not exempt from paying the VA loan funding fee (due to receiving or being eligible to receive VA compensation for service-connected medical conditions) will pay a higher VA loan funding fee for second time or subsequent use of the VA loan benefit.

For second time or subsequent use, the current VA loan funding fee at the time of this writing depends on how much down payment is made on the VA loan and whether the borrower is or was active duty, Guard or Reserve. Note that VA loan downpayments are not required in most cases, but making a down payment has several advantages which include a lower VA loan funding fee.

The VA has a list of funding fee percentages based on the amount of the downpayment. Those percentages include:

Less than 5% Down: 3.30% (both active duty and Guard/Reserve)

At least 5% down but less than 10%: 1.50% (active duty) 1.75% (Guard/Reserve)

10% down or more: 1.25% (active) 1.50% (Guard/Reserve)

In the case of our reader question, it’s entirely possible he or she was overcharged for the VA loan funding fee. In such cases, it’s important to contact both the lender and the Department of Veterans Affairs for assistance with a possible refund of the overpayment. It’s likely that such a refund may be applied to the balance of the loan itself unless the borrower paid the VA loan funding fee up front. Call the VA at 1-800 827-1000 for more information.

Do you have questions about VA home loans? Ask us in the comments section.

Bruce Reichstein

About Bruce Reichstein

Bruce Reichstein is an Expert on (VA) Military/Veteran Home Loan Guidelines for over 26 years. He is an experienced VA Loan Mortgage Banker who is passionate about assisting US Military Veterans utilize their Veteran Eligibility to purchase a home.

2 Responses to VA Loan Reader Questions: VA Loan Funding Fee Amounts For Second-Time Use

  1. Vincent Manna says:

    Will the VA follow the new guidelines the FHA has changed as of this August?
    The name of it is listed down below. this came down on August 15,

    FHA Back To Work Program Waives Foreclosure, Bankruptcy, And Short Sale Waiting Periods

    If you’ve experienced any of the following financial difficulties, you may be program-eligible :

    Pre-foreclosure sales
    Short sales
    Deed-in-lieu
    Foreclosure
    Chapter 7 bankruptcy
    Chapter 13 bankruptcy
    Loan modification
    Forbearance agreements
    The FHA realizes that, sometimes, credit events may be beyond your control, and that credit histories don’t always reflect a person’s true ability or willingness to pay on a mortgage
    thank you
    Vincent Manna

    • Joe Wallace says:

      At the time of this writing, VA has not released any information that might suggest it has a similar program, but that’s not to say that it won’t in the future…but for now there’s no information either way.

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