Posted by Did you know non exempt (meaning veterans required to the VA home loan funding fee) can cut their funding fee by as much as 54%? VA funding fee rates decrease with a small down payment.
VA Funding Fee – What Is It?
Many veterans using a VA home loan to purchase or refinance a home pay something called the “VA Funding Fee“. Veterans rated disabled by the VA however do not pay this fee. Check out VA funding fee rates below.
Cutting Funding Fee By 54% (on purchases)
The most expensive funding fee rate is charged when a non-exempt veteran puts 0% down on a home purchase. In fact non-exempt veterans pay the following rate with 0% down:
VA FUNDING FEE RATE @ 0% Down
- First Time VA Loan User: 2.3% of loan amount
- Subsequent VA Loan User: 3.6% of loan amount
However, both first time and subsequent VA Loan users reduce their funding fee to just 1.65%
VA FUNDING FEE RATE @ 5% Down
- First Time VA Loan User: 1.65% of loan amount
- Subsequent VA Loan User: 1.65% of loan amount
A 5% down payment reduces the VA funding fee from 3.6% to 1.65% for a non-exempt subsequent user. That equals a $7,800 savings on a $400,000 base VA loan amount.
While the funding fee is typically financed and therefore is not usually an out of pocket savings. However, financing $7,800 less over 30 years on a $400,000 base loan amount saves a veteran $11,000 out of pocket (based on a 3.5% interest rate).
VA Funding Fee Rates
| VA Loan Type | Down Payment | Funding Fee First Time Use | Funding Fee Subsequent Use |
|---|---|---|---|
| Purchase | 0% | 2.15% | 3.3% |
| Purchase | 5% to 9.99% | 1.5% | 1.5% |
| Purchase | 10% or more | 1.25% | 1.25% |
| Cash Out Refinance | N/A | 2.15 | 3.3% |
| VA Streamline (IRRRL) | N/A | .5% | .5% |
| Loan Assumption | N/A | .5% | .5% |