VA Loan Funding Fee

Veterans who obtains a VA home loan contribute toward the cost of this benefit through the funding fee.

Veteran Home Loans Rates for 5/17/2008
30 Year Fixed ----------------- 0.000 points 6.000% 6.110% APR		15 Year Fixed ----------------- 0.000 points 6.000% 6.190% APR		Hybrid 3/1 ARM ----------------- 0.000 points 7.500% 8.000% APR

Frequent Question # 32:
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Homebuyer's Help Part 2 - Will the VA give me help if my property is poorly built or defective?
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The VA has a great many ways to assist those seeking a VA mortgage, but there are also restrictions. When you purchase a home using a VA home loan, the VA does not offer guarantees that your home is free from defects. While the VA does conduct an appraisal of the property, this should not be misconstrued as an 'inspection' or approval of the condition of the property. The VA does not order builders to correct problems or defects in the construction of your home. It's the buyers responsibility to seek expert advice about the condition of a property before purchase. Additionally, the VA cannot offer legal counsel of any kind. The buyer is responsible for being informed about rights and responsibilities with regard to new property purchases. When in doubt, hire a lawyer or an expert in property evaluation. -- -- -- -- -- -- -- --

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VA Loan Facts: The Funding Fee

The VA loan funding fee is required by law. The fee, currently 2.15% percent on no down payment loans, 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% percent. 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.