VA loans and the breakdown of different funding fees

Mortgage and Lending with Primex Mortgage

A VA home loan is the most powerful and flexible lending option on the market today.  It is  issued to help eligible service members, reservists , veterans,  and unmarried surviving spouses obtain homes, residential cooperative housing units, condominiums and manufactured homes, as well as to refinance loans.   It helps protect authorized lenders of FHA from loss if the borrower fails to repay the loan.

It can be used to buy or build a home, buy a residential condominium unit, or buy a residential cooperative housing unit.  It also can be used to repair, alter, or improve a residence owned by the veteran and occupied as a home, refinance an existing home loan and buy a manufactured home or manufactured home and lot.  Moreover, it can also be used to install a solar heating or cooling system or other energy - efficient improvement.

To approve the assumption of loan, the lender must ensure that the borrower is a satisfactory credit risk and will assume all of the veterans' liabilities on the loan.  If approved by the VA or its authorized agents, the borrower will have to pay a funding fee that the lender sends to VA.  A funding fee must be paid to VA unless the veteran is exempt to pay such fee because he or she receives VA disability compensation.  The fee may be paid in cash or included in the loan.  Closing costs such as VA appraisal, title search, title insurance, recording fee, credit report, loan processing fee, transfer taxes, survey charges, or hazard insurance may not be included in the loan.

The following are the funding fees to different loan category:

•I.       Loans for purchase of construction with down payments of less than 5%, refinancing, and home improvement

•a.     Active Duty and Veterans                                    2.15 %

•b.    Reservists and National Guard                             2.40 %


•II.    Loans for purchase or construction with down payments of at least 5% but less than 10%

•a.     Active Duty and Veterans                                    1.50 %

•b.    Reservist and National Guard                              1.75 %


•III.   Loans for the purchase of construction with down payments of 10% or more

•a.     Active Duty and Veterans                                    1.25 %

•b.    Reservist and National Guard                              1.50 %


•IV.  Loans for manufactured homes

•a.    Active Duty and Veterans                                     1%

•b.    Reservist and National Guard                               1%


•V.    Interest rate reduction refinancing loans

•a.    Active Duty and Veterans                                     .50 %

•b.    Reservist and National Guard                              .50 %


•VI.  Assumption of a VA-guaranteed loan

•a.    Active Duty and Veterans                                     .50 %

•b.    Reservist and National Guard                              .50 %


•VII. Second or subsequent use of entitlement with no down payment

•a.    Active Duty and Veterans                                     3.3 %

•b.    Reservist and National Guard                              3.3 %


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