VA Loan Funding Fee

You may wonder what a VA funding fee is.  The funding fee is a guarantee fee charged to the VA. Department of Veterans Affairs (VA)  a federal agency which guarantees loans made to veterans; similar to mortgage insurance, a loan guarantee protects lenders against loss that may result from a borrower default.  So, they pool the money from each loan and then use the money towards any defaults.


Now, the funding fee varies based on the circumstances of the veteran or military member applying for the loan, the type of transaction and amount of down payment. All funding fees can be financed into the loan amount so no out of pocket money is required to pay this up front.
Veterans with a service related disability of 15% or more are exempt from these fees so they do not have a funding fee.


Below is a table for the funding fee as of today.


Purchase Transactions:

Type of Veteran	Down Payment	First Time Use	Subsequent Use for loans from 1/1/04 to 9/30/2011
Regular Military	None 5% or more (up to 10%) 10% or more	2.15% 1.50% 1.25%	3.3%  * 1.50% 1.25%
Reserves/ National Guard	None 5% or more (up to 10%) 10% or more	2.4% 1.75% 1.5%	3.3%  * 1.75% 1.5%

Cash-Out Refinancing Loans:

Type of Veteran	Percentage for First Time Use	Percentage for Subsequent Use
Regular Military	2.15%	3.3% *
Reserves/ National Guard	2.4%	3.3% *

* 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.

Other Types Of Loans:

Type of Loan	Percentage for Either Type of Veteran Whether First Time or Subsequent Use
Interest Rate Reduction Refinancing Loans	.50%
Manufactured Home Loans	1.00%
Loan Assumptions	.50%

VA loans may be used to purchase or refinance a property.