Calculate the VA Funding Fee

Are you exempt from the VA funding fee?

What is the VA funding fee?

Veteran sitting on the front porch with his familyThe VA funding fee is a one-time fee charged on all VA-backed home loans. The fee helps to cover the costs of the VA mortgage program, which includes providing assistance to Veterans when they purchase or refinance a home.

The VA funding fee is calculated as a percentage of the loan amount and is generally between 1% and 3% of the loan. The exact percentage depends on factors such as the Veteran’s service history and whether they are making a down payment.

Some Veterans are exempt from paying the VA funding fee. These exemptions include Veterans who are disabled, Veterans who are receiving VA pension benefits, and surviving spouses of Veterans who died in service or as a result of a service-connected disability.

The VA funding fee can be paid upfront or rolled into the loan amount. If you choose to finance the fee, it will increase your monthly mortgage payment.

You may be able to refinance your home loan and get a lower interest rate, even if you’re already paying the VA funding fee. This is because the VA funding fee is typically added to the loan balance and not paid as part of the monthly mortgage payment.

How Much is a VA Funding Fee?

The amount of the VA funding fee varies depending on the loan amount, and whether it's your first VA loan, and whether you're exempt. If you're exempt from the funding fee, you won't have to pay it at all.

VA Funding Fee Chart

VA funding fee chart

VA Funding Fee Exemption

Borrowers who are exempt from the funding fee include:

Borrowers who are exempt from the VA funding fee

If you are a veteran who is eligible for a VA loan, be sure to ask about the funding fee exemption. It could save you hundreds of dollars on your loan amount.

VA Funding Fee Refund

House with a sale signWhat if, when you go through the process of obtaining a loan and buying a home, you learn that your disability claim was accepted after you've already closed and paid the financing fee? While this is annoying, the good news is that you may be entitled to a refund of the fee if you are later determined to be eligible for an exemption.

To be eligible for compensation, you must have been entitled to it prior to the date of the closure. If the compensation takes effect after the sale of your home is complete, you may be disqualified for a refund.

Please contact your lender or call the VA Regional Loan Center at (877) 827-3702 if you feel you are entitled to a refund.

VA Funding Fee for Subsequent Use

If you're a veteran using your VA home loan benefits for the second time, you'll likely be required to pay another funding fee. Unfortunately, the funding fee is higher with a down payment less than 5% (see chart above) for subsequent users than it is for first-time borrowers. The VA funding fee for subsequent use is 3.6% of the loan amount. This fee can be rolled into your loan amount or paid in cash at closing.

VA Funding Fee on a Irrrl

Refinance your mortgage graphicThe VA has two refinance programs: The VA Cash-Out refinance and the Interest Rate Reduction Refinance Loan (IRRRL).

An IRRRL is a mortgage refinancing option that allows homeowners to take advantage of a lower interest rate. The IRRRL allows homeowners to refinance their current mortgage without having to undergo a full credit check or provide documentation of income. This refinance program is also referred to as a VA streamline refinance.

In order to be eligible for an IRRRL, the homeowner must currently have an existing VA mortgage, and the new mortgage must have a lower interest rate than the old mortgage. The funding fee for an Interest Rate Reduction Refinance Loan is .5%.


VA Funding Fee on a Cash-Out Refinance

The cash-out refinance program allows for additional cash back at closing, or can include the customary closing costs along with the payoff of the existing loan amount.

Funding fee percentage for VA cash out refinance

How is the VA Funding Fee Calculated?

Here's how to figure out how much the VA funding fee will cost you::

Loan amount – $200,000
Funding fee percentage X 2.3% = $4,600
Add the funding fee to the loan amount – $204,600
Final mortgage amount = $204,600

Can the VA Funding Fee Be Paid by Seller?

If you're a veteran looking to purchase a home using a VA loan, you might be wondering if the VA funding fee can be paid by the seller. The answer is yes, in some cases.

However, in some cases, the seller may agree to pay the VA funding fee. This can be negotiated as part of the sales contract.

There are also some cases where the VA funding fee can be exempted. If you are disabled or were wounded in combat, you may not have to pay the funding fee. You can also get an exemption if you are a surviving spouse of a veteran who died in service or from a service-related disability.
If you have any questions about the VA funding fee or whether you are exempt, be sure to ask your lender. They will be able to give you the most accurate information based on your individual situation.

Can the VA Funding Fee Be Rolled Into the Loan?

If you're a veteran looking to take out a VA loan, you may be wondering if the VA funding fee can be rolled into the loan amount. The answer is yes, in most cases, the funding fee can be included in the loan.

If you're rolling the fee into the loan, the amount will be added to your loan balance and you'll pay interest on it over the life of the loan. In some cases, you may be exempt from the funding fee. For example, if you're receiving disability benefits from the VA, you may not have to pay the fee.

If you're considering taking out a VA loan, be sure to talk to your lender about the VA funding fee and whether it can be rolled into the loan.

Can I Deduct the VA Funding Fee on My Taxes?

The VA funding fee may be deductible, provided you itemize your tax deduction. Speak to a tax advisor.

Rotating question markFAQs About How to Calculate the VA Funding Fee

Q. Do you pay PMI on a VA loan?

A. No, you do not pay PMI on a VA loan.

Q. Is the VA funding fee considered points?

A. No, the VA funding fee is not considered points. The VA funding fee is a fee that is charged by the VA in order to fund the VA home loan program.

Q. Is the VA funding fee a closing cost?

A. The VA funding fee is a closing cost, but it's also a one-time fee that you pay when you get your mortgage. The amount of the fee varies based on a number of factors, including your military service history and the size of your down payment (if required).

Q. What are the disadvantages of a VA loan?

A. The VA loan has a funding fee attached to it, unless the veteran qualifies for an exemption. In most cases, investment properties and second homes are not permitted.

Q. What credit score is needed for a VA loan?

A. The VA doesn't set a minimum credit score, but most lenders require a score of at least 620.

Read more about VA loans on the questions and answer page

Conclusion

In conclusion, the VA funding fee is a necessary evil that all Veterans must pay in order to obtain their VA home loan benefits. However, the amount of the fee can be reduced or waived altogether if certain eligibility requirements are met. So be sure to explore all of your options and take advantage of any available discounts. Thanks for reading!

SOURCE: Calculate the VA Funding Fee

Recommended Reading

  1. Buy a House With a VA Loan: Get More Info
  2. VA Mortgage Refinancing Cash Out: Get a cash out now
  3. VA Streamline Refinancing: Everything You Need to Know