What Is The VA Funding Fee?

The VA Funding Fee is a fee that is required in order to receive a VA loan.

There are a few exceptions that allow for the fee to be waived:

  • Veterans who are getting VA compensation due to service related disabilities.
  • Veterans who would be receiving VA compensation due to service related disabilities if they were not already receiving retirement pay.
  • Loans for spouses of veterans who passed away in service or because of service related disabilities.

VA funding rates have changed over time, but the rates listed in this article are for VA loans that will be closed before October 1, 2011. If you are interested in taking out a VA loan past this date, please feel free to contact us for the current fee amounts.

The amount of the VA funding fee required varies based on the amount of the down payment, whether this is the first time the borrower has taken out a VA loan, and whether the borrower served in active duty or in the reserves or National Guard.

For VA loans, borrowers who have served in active duty are categorized as either a first time user or a subsequent user.

For first time users, the fee structure is set up as follows:

  • 0 to <5% down payment: 2.15% fee
  • >5 to <10% down payment: 1.5% fee
  • More than 10% down payment: 1.25% fee

For subsequent users that are active or retired, the fee structure is:

  • 0 to <5% down payment: 3.3% fee
  • >5 to <10% down payment: 1.5% fee
  • More than 10% down payment: 1.25% fee

As you can see, the only change in the fee structures for first time and subsequent users is when the borrower goes with the “no down payment” option.

The difference between the two ends up equaling 1.15%, which is a fairly significant amount of money.

If you are considering taking out a VA loan and would be classified as a subsequent user (meaning you have already taken out a VA loan in the past), then you should strongly consider making a down payment.

For military members who have served in the active duty obtaining cash-out refinancing loans, the fee for first time users is 2.15% while the fee for subsequent users is 3.3%.

The funding fee requirement for both the Reserves and National Guard members is as follows.

For first time users, the fee structure is:

  • 0 to <5% down payment: 2.4% fee
  • >5 to <10% down payment: 1.75% fee
  • More than 10% down payment: 1.5% fee

For subsequent users the fee structure is:

  • 0 to <5% down payment: 3.3% fee
  • >5 to <10% down payment: 1.75% fee
  • More than 10% down payment: 1.5% fee

For Reserves and National Guard member cash-out refinancing loans, the fee for first time users is 2.4% while the fee for subsequent users is 3.3%.

In addition to the loans listed above, the VA requires funding fees for interest rate reduction refinance loans, also known as IRRRLs. The rate for an IRRRL is currently set at .5%.

There is also a VA-required funding fee for Manufactured Home Loans, which is currently set at 1%.

Lastly, the funding fee for a Native American Direct VA Loan is 1.25% at present, and the funding fee for a VA Assumption is .5% at this time.

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