What is a funding fee? 

The funding fee is essentially the way that the VA will guarantee your loan against default to the lender. It is a certain percentage of the loan amount which varies based on the type of loan and which branch of military you served in. It also can fluctuate depending on if you are a first-time or subsequent VA loan user, and whether or not you make a down payment. Considering the VA offers up to 100% financing, the borrower has some flexibility here. The VA funding fee can be either paid in cash or financed into the loan, however the funding fee must be paid at closing.

Did you know that…if you are deemed to be 10% disabled or more by the VA, you may be exempt from a funding fee?

If you are a veteran receiving VA compensation for a service related disability or a surviving spouse of a veteran who died in service or from a service related disability, you may not have to pay a funding fee at all!

Here is the breakdown of current funding fee costs on home purchases:

*As of May 2016 (http://www.benefits.va.gov/homeloans/purchaseco_loan_fee.asp)

At Morgan Financial we take pride in being a veteran owned local lender, specializing in VA and Conventional home loans. If you or someone you know is interested in a VA home loan, be sure to contact one of our VA loan experts to optimize on your benefits.