What is the VA Funding Fee for 2022?

One of the first few choices veterans and active-duty military members consider for a home purchase is their right to apply for a VA mortgage loan. These mortgages are backed by the U.S. Department of Veteran Affairs (VA). However, while taking this loan, eligibility and documentation requirements are often less strict than a traditional mortgage. Also, members do not have to pay for any down payment or expensive mortgage insurance.

But there’s one fee most people who get a VA-backed mortgage loan have to pay: the VA funding fee. The VA funding fee in simpler terms is a one-time payment for getting a new or refinanced VA-backed mortgage. The purpose of the VA funding fee is for security of subsidizing a loan that doesn’t require much eligibility and documentation requirements and mortgage insurance.

VA funding fee exemption.

Most veterans and active-duty military members will have to pay the VA funding fee when applying for a mortgage loan, but there are some exemptions. This will certainly apply to you if you match one of the criteria below:

• If you are a service member with a memorandum or proposed rating on or before the loan closing date
• If you are an active-duty service member awarded the Purple Heart on or before the mortgage loan closing date
• If you are compensated for a service-connected disability
• If you are the surviving spouse of a veteran or active-duty military member who lost his/her life during service, or died from disability connected to service, or perhaps totally disabled during service, and you receive the Dependency and Indemnity Compensation (DIC)
• If you receive retirement or active-duty pay instead of service-connected VA compensation you are eligible for. Your personal credit score will be reviewed at the time of application.

VA loan funding fee calculator.

The VA funding fee is, in some ways, different for everyone. This difference is based on a variety of factors connected to your personal financial situation. How does the VA loan fee calculator work? The calculator will help you realize the fee amount that would apply to the specific property you’re purchasing.

If you are a regular military member with no down payment, then the funding fee will automatically be 2.3% of your first loan, and then 3.6% of the subsequent ones. However, if you intend to make a down payment, the fee can be reduced to 1.65% for all loans with a down payment between 5 and 10%. And it is then reduced to 1.4% for regular military members who are able to make a down payment of more than 10%.

VA loan funding fee refund.

Speaking of government-backed VA mortgage loans for veterans and active-duty military members, it is an initiative that offers veterans and troops an incredible mortgage option. But the government charges many borrowers a funding fee to offset the costs of the program. Luckily, some veterans qualify for funding fee exemptions, and on the other hand, there is a way to seek a refund if it happens that you’ve been wrongly charged.

When you apply for a VA loan, your VA loan certificate of Eligibility, showing whether or not you qualify for an exemption under one of the categories above, will be reviewed. The application period takes time, so, during that period, a veteran may have paid the funding fee, and then receive an exemption later. In this kind of scenario, you can receive a refund.

Owing to the fact that the funding fee was paid directly to the VA, it is the VA that can, in due course, decide whether or not you receive a refund. However, to begin the refund process, you can either contact the VA loan center in your region or get in touch with your lender directly.

VA funding fee chart.

The biggest factor that determines the funding fee a borrower will pay is the down payment. And in cases whereby borrowers are not required to pay a down payment, the total loan amount comes into focus.

However, fees for a VA loan can vary, depending on whether it’s the first loan or subsequent loans. The following chart shows the current loan funding fee for veterans and active-duty military members as well as reserve members and national guards.

How to avoid VA loan funding fee?

It is important to note that about 40% of all veterans are exempt from paying the VA funding fee. This shows that not every borrower has to pay the VA loan funding fee. In order to avoid paying the VA loan funding fee, you need to find out if you are eligible for an exemption, as the rules are being altered from time to time. Check the above exemption list to know if you fall into any of the categories.

Contact the Ability Mortgage Group to help you get started on the right path to a better financial future.

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