VA loans

VA Loan Down Payments? A Reader Question

August 11, 2014

VA Loan Down Payments? A Reader Question

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A reader asks, “I thought when you bought a home using my VA benefits that there was no money down. If I purchase a home for $204,000 what are the additional costs now? What is this VA funding fee and how much would that be along with any other additonal costs needed up front?”

The VA loan funding fee is not considered part of the VA borrower’s down payments should he or she choose to make one. It is true that VA loans do not require down payments in most cases, but the VA loan funding fee is an expense related to the use of the VA loan benefit.

There are other fees and expenses associated with a VA loan that are not considered a down payment, including appraisal fees, flood zone determination and other costs.

There is no specific dollar amount for the VA loan funding fee–it is a percentage of the loan amount and based specifically on the transaction the borrower has agreed to. Additionally the amount of the VA loan funding fee may vary based on whether the borrower is a first-time VA loan applicant or a second-time VA loan user, etc.

There is also no specific set dollar amount for the other fees and charges for the loan–these depend on the market, the nature of the transaction, and a wide variety of other variables.

It’s best to discuss estimated cash needed with a loan officer to get an idea of how much you may be required to budget and save for in a VA mortgage loan. Borrowers should begin preparing and saving for a VA mortgage loan at least 12 months ahead of time to insure they have enough set aside for the fees and expenses required in the VA loan transaction.

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

2 Comments
  1. kent white

    I have a house in NY. I purchased 1999 thur the VA loan processe.In 2009 i tranfered to NC.I was unable to sell my house so i made it a rental property.I have been renting a house NC. for years. Now I Want to buy the house i am renting using the VA Loan process. NC. is now my primary resident not NY. Can i obtain another VA.LOAN for this new property in NC. if not can the VA loan elibility be transfer for the new purchase in NC.My primary home.

    • Joe Wallace

      Depending on circumstances it may be possible so long as you have VA loan entitlement to use (or bonus entitlement) and you intend to occupy the new home purchased with a VA loan.

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