veteran home loan funding fees

VA Loans

Explanation of Funding Fees for Veteran Home Loans

Veteran home loans are a great option for military borrowers due to their attractive interest rates and relaxed qualification requirements. There’s no down payment required for VA loans, but borrowers must pay something called the “VA Funding Fee.” If you’re new to the VA loan process, you may be wondering what exactly this fee entails and how much it costs. Below, we’ve provided a detailed explanation.


Quick Overview of Veteran Home Loan Funding Fees

VA funding fees are one of the costs that borrowers incur when they take out a VA home loan. Borrowers can either pay the cost in full at closing or with financing and include it in their mortgage. If the borrower chooses the second option, they’ll make payments over time until the fee is paid off. 


What Is the VA Funding Fee, and Who Pays It?

The VA funding fee is a one-time cost associated with Veteran home loans. The fee is paid by the borrower, who is the individual purchasing the home. The purpose of the fee is to lower the cost of the loan for U.S. taxpayers.

Most VA borrowers have to pay a funding fee, but there are a few exceptions. Individuals with  service-connected disabilities, surviving spouses receiving Dependency and Indemnity Compensation (DIC), and other qualifying individuals with special circumstances may be able to have the fee waived. 


How Much Does the Funding Fee Cost?

The cost of your funding fee will depend on the amount of your loan as well as other factors such as the type of loan, down payment amount, and whether or not it’s your first time taking out a VA loan. 

We realize that this is somewhat of a vague answer. But the good news is, the VA has made some handy charts that explain funding fee rates. If you look at the charts (listed under the section “VA funding fee rate charts”), you’ll see the exact amount that rates fluctuate based on the factors mentioned above.


A Note About Closing Costs

It’s important to note that the funding fee isn’t the only cost you’ll pay when you take out a Veteran home loan. You’ll also be responsible for additional closing costs such as the loan origination fee, appraisal fee, etc. The good news is, you can try to negotiate with the seller and get them to cover some of these costs. However, sellers generally cannot pay more than 4% of the total loan amount in concessions.


Have Questions?

If you have questions about your Veteran home loan funding fee, please do not hesitate to reach out! Our friendly staff will be more than happy to assist you!