A huge benefit of the VA home loan is that it does not require mortgage insurance. This is true even if you put less than 20% down on a purchase loan, or if you don’t have at least 20% in equity for a refinance. This can mean saving hundreds of dollars a month — depending on how much is financed when compared to other loan options.
Here’s the kicker: VA loans do require a funding fee. The amount is determined by a calculation that uses a predetermined percentage, which is multiplied by the loan amount.
The resulting fee is then added to the loan amount, or you can pay it with cash. Most people add it to their loan amount.
It’s possible to be exempt from the funding fee if you receive VA disability benefits. To find out if you meet the criteria, be certain to notify your loan officer that you receive VA disability income (even if you don’t need the extra income to qualify you for the loan) to see if you can waive the fee. This little tip could literally save you THOUSANDS of dollars!
|Type of Veteran||Down Payment||Percentage for 1st Time Use||Percentage for Subsequent Use|
|Military||5% or more (up to 10%)10% or more||1.50%1.25%||1.50%1.25%|
|Reserves/National Guard||None5% or more (up to 10%)10% or more||2.4%1.75%
Cash-Out Refinancing Loans
|Type of Veteran||Percentage of 1st Time Use||Percentage for Subsequent Use|
*The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home loan.
|Type of Loan||Percentage for Either Type of Veteran Whether First Time or Subsequent Use|
|Manufactured Home Loans (NOT permanently affixed)||1.00%|