VA Home Mortgages – What do they cost?

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If you’re eligible for a VA home loan, it is seriously a great option! As I touched on in The Pillars of a Home Mortgage Application, there is no down payment requirement when purchasing a home and, you won’t need mortgage insurance. The only extra charge by the VA is their very reasonable Funding Fee, more on that below. There are also VA only options when you want to refinance your current VA loan, reach out to me if you’d like to know more about those.

In order to help subsidize the 25% guarantee the VA gives on all eligible VA home loans, a funding fee is charged. That’s right, the VA actually guarantees 25% of the loan, that way lenders have less risk when working with a VA borrower, and therefore veterans are more easily approved and more veterans are able to own homes.

The Funding Fee is a one time payment which you can pay at closing, or instead add to your loan. Depending on how much you decide to put down on a purchase or how much of the home value you want to refinance, will determine your Funding Fee. It should be noted, if the veteran has a service related disability deemed 10% or greater, this Funding Fee is waived all together.
For information on VA eligibility requirements, visit the VA site directly at:

Here’s a breakdown of the Funding Fee and how it might apply to you as a first time user:


Down Payment
Prior Active Duty / Active Duty
Prior Reserves / National Guard
Less than 5%
2.15% of loan value
2.4% of loan value
At least 5%
But less than 10%
1.5%
1.75%
10% or more
1.25%
1.5%

 This means if you put down less than 5%, and are prior active duty / active duty, your one time Funding Fee will be 2.15% of the loan value.


So what does this look like in reality?
I’ll use a loan value of $250,000

Down Payment
Active Duty
Reserves / National Guard
Less than 5%
$5,375
$5,350
At least 5%    $12,500 = 5%
But less than 10%
$3,750
$4,375
10% or more $25,000 = 10%
$3,125
$3,750


Remember, this funding fee can be paid at closing, or instead added to the existing $250,000 loan value. There are still other costs to financing a home, including prepaid taxes and insurance, which will still have to be paid at closing. This Funding Fee is specific to VA loans only. If you’re wondering how this VA loan could be a better option for you than a conventional loan, reach out to me, I’d be happy to help with your current situation.
Maverick Johnston
509-230-0768
NMLS ID #1668965

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