Posted by VA funding fees increase in 2020 for veterans using a VA Home Loan. Regular Military, Reservists and National Guard veterans also now all pay the same funding fee.
VA Funding Fee
VA Funding fees increase in 2020 for many VA Home Loan scenarios. These VA Funding Fee increases resulted from the same law that eliminates VA Loan Limits in 2020. Based on this law, the new VA Funding Fees are effective for all VA loans closed on or after January 1, 2020.
“The [new] table summarizes funding fee rates for the most common types of loans for all Veterans (Regular Military, Reserves, and National Guard)…”
VA Circular 26-19-23
VA Funding Fee Rate Chart (Effective January 1, 2020)
| VA Loan Type | Down Payment | Funding Fee First Time Use | Funding Fee Subsequent Use |
|---|---|---|---|
| Purchase | 0% | 2.30% | 3.60% |
| Purchase | 5% to 9.99% | 1.65% | 1.65% |
| Purchase | 10% or more | 1.40% | 1.40% |
| Cash Out Refinance | N/A | 2.30% | 3.60% |
| VA Streamline (IRRRL) | N/A | .5% | .5% |
| Loan Assumption | N/A | .5% | .5% |
While not all VA Home Loan transactions have a higher funding fee, the most common types do. In fact, except for exempt veterans, streamline or IRRRL refinances and VA loan assumptions the VA Funding fee increased for all other transaction types in 2020. The VA Funding Fees increase for each of the following scenarios for non-exempt veterans:
- VA Purchase Loans
- New Construction Loans
- VA Cash Out Refinance Loans
How to Calculate Your VA Funding Fee
Calculating your VA Funding Fee total cost is a 3 step process. Follow these 3 steps to figure out how much your VA Funding Fee is.
- Determine Loan Amount
First, begin by finding your “base loan amount”. Your base loan equals the amount are borrowing (for both a purchase or refinance). Even if just an estimate, start by determining what your base loan amount is.
- Find Your VA Funding Fee Rate
Using the new VA Funding Fee chart above, determine which funding fee rate applies to your specific scenario. This rate is also called your “VA Funding Fee Percentage”.
- Calculate Your Funding Fee
After completing steps 1 & 2, simply multiply your loan amount by your funding fee rate. The result equals your total funding fee cost. For example
$400,000 (Loan amount) X 2.30% (Funding Fee Percentage) = $9,200 Funding Fee
That’s it! Now you know your funding fee. The next question is how does this fee get paid for and who pays it?
Who Pays for Your VA Funding Fee?
Now that you understand how to calculate the VA Funding fee, you may wonder how it is paid for. A VA Funding Fee is paid in 1 of 3 ways:
- Financed into your VA Loan amount
- Paid out of pocket by Veteran
- Paid by seller of home veteran purchases
In fact, the VA funding can be paid by any 1 or a combination of the 3 options above. However, VA does limit how much a seller can contribute to a Veteran on a home purchase transaction.
By Jeremy House