Who Can Pay the VA Funding Fee?

Who Pays the VA Funding Fee and Who is Exempt?

The beauty of a VA Loan is that the Veteran is able to get a 100% loan. There is a caveat that a VA Funding Fee must be paid unless the Veteran is exempt from the requirement. The exemption will allow for a truly 100% loan to take place and if the seller pays the closing cost, the Veteran can get the home with almost no investment.

The way it works is the Department of Veterans Affair guarantees the loan and when the Funding Fee is collected it helps offset the expense of running the VA program.

If a VA Funding Fee is required, the VA will allow the fee to be added into the loan and be financed over the life of the loan. The buyer can pay it upfront as well and the seller can pay all or a portion of the Funding Fee for the Veteran buyer.  

Check out the specifics of the Funding Fee at the VA website. The funding fee can range from 2.15% of the loan amount for first time users of their VA loan to 3.3% for second time users. The Funding Fee varies depending on whether it is a streamline refinance, cash out refinance aor for eligible National Guard and Reservists. The Funding Fee is less when there is a 5% down payment made on the loan and 10% down reduces it to 1.25% of the amount financed. 

Do you want to know who is exempt from paying the VA Funding Fee at closing?

• Veterans that receive VA disability compensation for their service-connected disabilities.
• Veterans who would be entitled to receive compensation for their service-connected disabilities if they weren't receiving retirement pay.
• The surviving spouses of Veterans that died in service or as the result of a service-connected disability. The surviving spouse does not have to be a Veteran but if the spouse has his own VA entitlement and uses it for the loan, he is still exempt from paying the Funding Fee.
  
  

Most Veterans getting out of the military are qualifying for a VA disability. This is a reflection of the severe physical strain that is put on our active duty military. If a Veteran gets 10% disability then the Funding Fee is waived on the sale or refinance. This can be a huge savings resulting in saving thousands of dollars. Active duty military will have to pay the fee.

Would you like more about VA Loan? Are you interested in purchasing a home in Clarksville TN? Contact The Real Debbie Reynolds, Clarksville TN Real Estate Agent, 931-320-6730.