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VA Loan Facts
VA LOAN FUNDING FEE
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, up to 10% down payment requires a 1.5% fee, and 10% or more requires a 1.25% fee.
For subsequent users, no down payment requires a 3.3% fee, up to 10% down payment requires a
1.50% fee, and 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, up to 10% down payment requires a 1.75% fee, and 10% or more requires a
1.5% fee. For subsequent users, no down payment requires a 3.3% fee, up to 10% down payment
requires a 1.75% fee, and 10% or more requires a 1.5% fee.
Cash-out refinancing loans for regular military requires 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. 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).
Please note that the VA has the final say on who is exempt.
FREQUENTLY ASKED QUESTION # 20 [ -more VA Loan questions- ]
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Q: VA Loans and Your Debt Ratio - How is my VA home loan eligibility determined?
A: To qualify for a VA home loan, you must fall into a certain debt ratio. Your income, credit card debts and the new indebtedness created by the VA mortgage are all tallied up to see where you land in terms of debt. The maximum debt ratio you may have and still qualify for a VA home loan is 41%. This is only one factor used to determine eligibility, the others include your reliable income and credit rating. If you are considering applying for a VA home loan, you may wish to make an appointment with a financial planner and debt counselor to see how you might improve your standing in advance of the application process.
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VA Loan Rates
for 5/13/2008
30 year fixed
-----------------
0.000 points
6.000%
6.110% APR
15 year fixed
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0.000 points
6.000%
6.190% APR
Life Insurance for Military Members
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