VA Loan Funding Fee Questions
There are many questions borrowers have about VA loan funding fees. The most common is simply, “how much will I have to pay for the VA loan funding fee?” Unfortunately there is no set dollar amount, as the funding fee is calculated based on a percentage of the loan amount, whether you’re a first time borrower or not, and what type of military service the borrower is associated with.
Who Pays The VA Loan Funding Fee?
All borrowers who are not declared exempt from paying the VA loan funding fee must pay it. Exemption is granted to those who receive or are eligible to receive VA compensation for service-related disabilities. Becoming exempt is NOT automatic, it must be applied for through the Department of Veterans Affairs.
How Much Is The VA Loan Funding Fee?
As mentioned above, there is no set dollar amount for the VA loan funding fee. It may be calculated as high as 3.3% of the loan amount (for second-time borrowers) or lower.
Making a down payment of 5% or more lowers the VA loan funding fee. Since the fee is calculated based on the loan amount you’ll need to have specific numbers (sale price, VA appraised value, etc) to learn how much you might have to pay. Work with a lender on your questions about the VA loan funding fee for more specific advice.
Do I Have to Pay The VA Loan Funding Fee In Cash, Up Front?
According to the VA Lender’s Handbook, “The funding fee may be paid from loan proceeds or cash from borrower.”
If I Am Later Determined To Be Exempt From The VA Loan Funding Fee, Do I Get A Refund?
The VA Lender’s Handbooks says, “If the veteran has a pending disability compensation claim at the time of loan closing, the funding fee must be remitted as if the borrower was not exempt.” The rules also instruct the lender, “Advise the veteran to contact the VA RLC to request a refund if it is later determined that the veteran is entitled to compensation retroactively to a date prior to loan closing.”
Do you have questions about VA home loans? Ask us in the comments section.