VA Home Loans are among the best ways for veterans to fund a home purchase. VA Loans provide veterans a possibility to buy a home with little to no money down, and in many cases, the VA Loan interest rates are lower than traditional mortgage rates.
No closing costs with a VA Loan
Numerous veterans opt to utilize a VA Loan to fund their house since they do not have to pay any closing costs on their purchase. This can save home buyers thousand of dollars on the closing. But VA Loans might go through a funding fee, which is required by federal law and is something that traditional loans don’t have. It is essential to be knowledgeable about these costs, and compare them when shopping for a loan.
VA Loan Funding Fee
The VA Loan funding fee is presently evaluated at 2.15% of the purchase cost of the home for veterans who are using a VA Loan for the very first time and don’t put any money down.Veterans buying a home without a down payment and using a VA Loan for a second time are required to pay a 3.3% financing charge.
So a $250,000 house would have a $5,375 funding fee for a first time VA Loan buyer, and $8,250 for a second time VA Loan buyer. The VA Loan financing fee is required by federal law to have veterans assist pay for the benefit of being able to buy a home with no money down. This fee can be paid at closing, or it can be rolled into the purchase cost — allowing the veteran to buy a house with no down payment.
VA Loan Funding Fee Reductions
Veterans who make a down payment may be entitled to a reduction in their VA Loan funding charges. A deposit of 10% will result in a first time funding cost of 1.5%, greater than 10% will be 1.25% of the loan. The fess are 1.75% and 1.5% respectively for 2nd time VA Loan users.
Members of the Guard/Reserves may pay a 2.4% cost for 1st time home buyer with no down payment, a deposit as much as 10% requires a 1.75% cost, and a deposit of 10% or more features a 1.5% financing fee. Guard/reserve veterans utilizing the VA Loan a subsequent time are required to pay a 3.3% funding cost if they are not making a down payment, a 1.75% cost for a down payment as much as 10%, and a 1.5% financing cost for a 10% or greater deposit.
VA Loan Funding Fee Exemptions
There are a few exemptions for the financing fees — for example, veterans might be exempt if they receive disability compensation from the VA, and veterans who are considered at least 10% disabled. Furthermore, surviving spouses of those who died in the service might be exempt from paying VA Loan funding costs.
When applying for a VA home loan, be sure to speak with your loan officer about qualifying for a VA Loan funding fee waiver. If you are eligible for this exemption, you will need to provide documentation of your VA disability to your lender.
Questions about VA loan eligibility? Give us a call at (844) 726-6924.