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what is a va funding fee used for, how much should it usually be and can it be waived ?

by samfridrich868 from , California. Mar 3rd 2015 Reply


Linda Thompson (LoansbyLinda)
#856 ranked lender in California - 32 contributions

Hi Sam,I've included some information below for you on these types of loans. I am a VA loan agent, and do almost all VA loans. I'm in California also and would love to help out. Please give me a call so we can discuss at 510-332-3282. Linda-------------------------------The VA funding fee is required by law. The fee, currently 2.15% on no down payment loans for a first-time use, is intended to enable the veteran who obtains a VA home loan to contribute toward the cost of this benefit, and thereby reduce the cost to taxpayers. The funding fee for second time users who do not make a down payment is 3.3%. The idea of a higher fee for second time use is based on the fact that these veterans have already had a chance to use the benefit once, and also that prior users have had time to accumulate equity or save money towards a down payment.For purchase and construction loans, members of the regular military fall into the category of first time user or subsequent user. For first time users, no down payment requires a 2.15% fee, down payment of at least 5 percent but less than 10 percent requires a 1.5% fee, and down payment of 10% or more requires a 1.25% fee. For subsequent users, no down payment requires a 3.3% fee, down payment of at least 5 percent but less than 10 percent requires a 1.5% fee, and down payment of 10% or more requires a 1.25% fee.For the category of Reserves / National Guard, first time users with no down payment requires a 2.4% fee, down payment of at least 5 percent but less than 10 percent requires a 1.75% fee, and down payment of 10% or more requires a 1.5% fee. For subsequent users for the category of Reserves / National Guard, no down payment requires a 3.3% fee, down payment of at least 5 percent but less than 10 percent requires a 1.75% fee, and down payment of 10% or more requires a 1.5% fee.Cash-out refinancing loans for regular military require a 2.15% fee for first time users and a 3.3% fee for subsequent users. For Reserves / National Guard, the requirement is a 2.4% fee for first time users and a 3.3% fee for subsequent users. If there are down payments involved, refer to the information above. On interest rate reduction loans, the VA funding fee is .50% and it is 1.0% on Manufactured Home Loans.The following persons are exempt from paying the funding fee:Veterans receiving VA compensation for service-connected disabilities.Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay.Surviving spouses of veterans who died in service or from service-connected disabilities (whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan).HOPE THAT HELPS Sam :)

Mar 4th 2015
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,240 contributions

Lots of info from Linda, bottom line: VA sets the fee in return for allowing eligible veterans to borrow 100% of the price of a home, plus the funding fee (so your loan can be more than the purchase price). The cost varies depending on whether it is your first loan or 2nd-3rd, etc. It is never waived unless the veteran receives VA disability income which the lender has to confirm on the Certificate that says you are eligible for a VA mortgage.

Mar 4th 2015
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

The VA funding fee is mandatory on every VA loan, and can only be waived if the veteran has a military related disability. Once a VA eligibility certificate is ordered, it should state if the veteran has to pay or if the fee is waived. The fee varies based on your type of service, (Regular military/Reserves/National Guard), your down payment, and whether or not you have used VA in the past. It can range anywhere from 1.25% to 3.3% of the loan amount. The Fee is collected as an insurance premium that is used to pay claims against VA losses as a result of foreclosure or short sales. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Mar 4th 2015
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Larry Gray (lgray_312_247)
#593 ranked lender in California - 1,139 contributions

Linda Thompson covered the bases pretty well. The number of eligible Veterans with disabilities has expanded to include Veterans with less than 50% disability, and therefor you might be eligible to have the funding fee waived. The wonderful aspect of a VA loan is that the only cost from VA can be financed into the loan enabling the homebuyer to merely be responsible for coming up with the money for closing and settlement costs. Some of those fees can sometimes be covered by the seller to reduce the amount you have to come in with. The lender may provide credit towards closing costs as we often do.

Mar 4th 2015
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