The cost of a VA home loan is going up beginning January 1, 2020 when the funding fee is being increased from 2.15% to 2.3% for first time use.  The amount increases to 3.6% for subsequent zero-down payment loans.  Reservists and national guard veterans are subject to a slightly higher fee.

Veterans pay a funding fee when purchasing a home with a VA insured loan.  This one-time charge, collected by the Department of Veteran Affairs, is based on the loan amount to value with the fee decreasing as the down payment goes from 0% to 5% or 10% or more.  It can be paid upfront or rolled into the mortgage.

VA loans do not require mortgage insurance like FHA or 90-95% conventional loans.  They are backed by the Department of Veterans Affairs by guaranteeing a portion of the loan to the lender if a borrower defaults.  This relieves U.S. taxpayers the full burden of backing the loans.

The funding fee is waived for disabled veterans and surviving spouses of a veteran who died in service or from a service-connected disability.  Active-duty service members who have received a Purple Heart will be exempt from the funding fee beginning January 1, 2020.

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