🏠📊 Understanding VA Loan Funding Fee Chart
Are you a veteran, active military member, or surviving spouse who wants to buy a home without paying a hefty down payment? A VA loan can help you achieve your dream of homeownership, with various benefits, including no down payment requirements and no private mortgage insurance premiums.
However, while a VA loan is a great option for homebuyers, the program charges a funding fee to help offset the cost of the loan to taxpayers. The amount of the funding fee varies depending on several factors, such as the type of loan, the borrower’s military status, and the down payment amount.
If you’re considering a VA loan, it’s important to know how the funding fee works and how much you should expect to pay. That’s where the VA loan funding fee chart comes in. In this article, we’ll take a comprehensive look at the VA loan funding fee chart and provide valuable insights to help you make informed decisions.
🤔 What Is a VA Loan Funding Fee?
Before delving into the funding fee chart details, let’s first establish what a VA loan funding fee is.
A funding fee is a one-time payment charged by the Department of Veterans Affairs (VA) to borrowers who use a VA loan. The fee goes towards ensuring the loan program remains self-sustaining and available to future generations of military homebuyers. The VA loan funding fee is different from a down payment and is non-refundable. In contrast, a down payment is a percentage of the total loan amount paid upfront to lower the loan’s principal balance.
The VA loan funding fee is typically included in the loan amount, which means it gets rolled into your monthly mortgage payment. However, you can choose to pay the funding fee upfront or finance it separately.
đź“ť What Does the VA Loan Funding Fee Chart Show?
The VA loan funding fee chart displays the funding fee rates for different categories of VA loans. These categories include:
- Purchase loans
- Refinance loans
- Interest rate reduction refinance loans (IRRRLs)
- Native American Direct Loan (NADL) program
The chart also takes into account the borrower’s military status and how much, if any, down payment you will make.
đź“Š Understanding VA Loan Funding Fee Chart Rates
The VA loan funding fee rates vary depending on the factors mentioned above. Here’s what you need to know:
VA Loan Purchase Funding Fee Rates
| Veteran / Service Member | Down Payment | 1st Time Use | Subsequent Use | |
|---|---|---|---|---|
| Less than 5% | 5% or More | |||
| Regular Military | 2.30% | 1.65% | 2.30% | 3.60% |
| National Guard/Reserves | 2.40% | 1.65% | 2.40% | 3.60% |
| Disabled Veteran | Exempt | Exempt | ||
| Surviving Spouse | Exempt | Exempt | ||
The VA loan purchase funding fee rates depend on the borrower’s military status, down payment amount, and whether it’s their first time using a VA loan or subsequent use. Regular military members pay a lower funding fee rate when they make a higher down payment.
Meanwhile, National Guard and Reserve members pay a slightly higher rate than regular military members. However, if they make a down payment of at least 5%, the rate decreases to 1.65%.
Finally, qualifying surviving spouses and disabled veterans pay no funding fee whatsoever.
VA Loan Refinance Funding Fee Rates
The VA loan refinance funding fee rates vary depending on the loan type, the borrower’s military status, and the percentage of the loan being refinanced. Here’s the breakdown:
Loan Type |
For First-time Use |
For Subsequent Use |
|---|---|---|
Regular Military |
2.30% |
3.60% |
National Guard / Reserves |
2.40% |
3.60% |
IRRRL (Interest Rate Reduction Refinance Loan) |
0.50% |
0.50% |
Refinance funding fees for regular military and National Guard or Reserves members are higher compared to purchase loans. However, IRRRLs only have a 0.50% funding fee rate, making them an affordable option for refinancing.
VA Loan Native American Direct Loan (NADL) Funding Fee Rates
The VA loan Native American Direct Loan (NADL) program is geared towards Native American veterans and their spouses. The funding fee rate is 1.25%.
🌟 VA Loan Funding Fee Chart Tips
Here are some tips to help you navigate the VA loan funding fee chart:
- Use a VA loan calculator to get an estimate of your funding fee costs.
- If you’re a veteran with a service-connected disability, you’re exempt from the funding fee.
- If you’re a surviving spouse of a veteran who died in service, you’re exempt from the funding fee.
- You can reduce your funding fee rate by making a higher down payment.
- Always consult with your lender or VA-approved counselor to understand your funding fee requirements fully.
🤔 VA Loan Funding Fee Chart FAQs
Q: What Is the VA Funding Fee for 2021?
The VA funding fee rates for 2021 are as follows:
- For regular military members, the funding fee ranges from 1.4% to 3.6%, depending on the size of the down payment and whether it’s the borrower’s first time or subsequent use.
- National Guard and Reserve members pay a slightly higher fee, ranging from 1.65% to 3.6%.
- Surviving spouses and disabled veterans are exempt from paying the funding fee.
Q: Is the VA Funding Fee Tax-Deductible?
No, the VA funding fee is not tax-deductible. However, you can include it in the cost basis of your home when you sell it.
Q: Can I Get a Refund on the VA Funding Fee?
No, the VA funding fee is non-refundable, even if you refinance or sell your home.
Q: Can I Roll the VA Funding Fee into My Loan?
Yes, you can finance the VA funding fee into your loan or pay it upfront. Financing it will increase your loan amount, and you’ll end up paying interest on the funding fee.
Q: Why Do I Need to Pay a VA Funding Fee?
The VA funding fee goes towards helping offset the program’s cost to taxpayers and keeping it available for future generations of military homebuyers.
Q: Do I Have to Pay VA Funding Fee if I Have a Service-Connected Disability?
No, if you have a service-connected disability, you’re exempt from paying the VA funding fee.
Q: How Does a Down Payment Affect the VA Funding Fee?
Making a higher down payment can reduce your VA funding fee rate. For example, regular military members who make a down payment of at least 5% get a lower funding fee rate of 1.65% compared to 2.30% for those who make less than a 5% down payment.
Q: Do VA Funding Fee Rates Change?
Yes, VA funding fee rates can change depending on factors such as the loan program’s sustainability and congressional action.
Q: Can I Get a Waiver for the VA Funding Fee?
If you’re receiving VA compensation for a service-connected disability or have a Purple Heart or other qualifying disability, you may be eligible for a waiver of the funding fee.
Q: How Do I Pay the VA Funding Fee?
You can pay the VA funding fee upfront, finance it into your loan, or have it waived if you’re eligible. Talk to your lender or VA-approved counselor to understand your options fully.
Q: Is the VA Funding Fee Different for Active Duty vs. Reservists?
Active duty and reservists pay the same VA funding fee rates, with the exception that reservists must pay a slightly higher rate when making less than a 5% down payment.
Q: Can I Have the VA Funding Fee Waived If I’m Buying a Second Home?
No, the VA funding fee applies regardless of whether it’s your first or second home. However, subsequent-use borrowers can get a lower funding fee rate if they make a down payment of at least 5%.
Q: Can the VA Funding Fee be Rolled into a Refinance Loan?
Yes, you can finance the VA funding fee into your refinance loan or pay it upfront. However, keep in mind that financing it increases your loan amount and interest costs.
Q: Can I Get Help Paying the VA Funding Fee?
In some cases, you may be eligible for financial assistance to help pay the VA funding fee. Talk to your lender or VA-approved counselor to learn more.
đź‘Ť Conclusion: Make an Informed Decision with VA Loan Funding Fee Chart
Now that you have a better understanding of the VA loan funding fee chart, you can make informed decisions when buying or refinancing a home. Remember to use a VA loan calculator to estimate your funding fee costs and talk to your lender or VA-approved counselor to understand your options fully.
VA loans offer various benefits, making them a great option for eligible military personnel and their families. With the right knowledge and resources, you can take advantage of these benefits and achieve your dream of homeownership.
So, are you ready to take the next step towards getting a VA loan? Talk to your lender today and start your journey towards homeownership.
🙏 Closing: Thank You for Your Service
We want to thank you for your service to our country. We appreciate your sacrifices and dedication and hope this article helps you navigate the VA loan funding fee chart with ease.
âť— Disclaimer
The VA loan funding fee chart rates and information provided in this article are subject to change. Please consult with your lender or VA-approved counselor for the most up-to-date information and to understand your individual funding fee requirements.