What is the VA funding fee and why does the veteran borrower have to pay for it?
The VA funding fee is required by law. The fee is intended to enable the veteran who obtains a VA home loan to contribute toward the cost of this benefit, and thereby reduce the cost to taxpayers. The VA funding fee with a down payment of less than 5% of the purchase price is higher for subsequent veteran borrowers. The idea of a higher fee for second time use is based on the fact that these veterans have already had a chance to use the VA home loan benefit once, and have had time to accumulate equity or save money towards a down payment. Notably, VA funding fee is not an out of pocket cost and is only fee associated with a VA home loan that is financed into the balance of the mortgage. The only time the VA funding fee is waived is if the veteran borrower has a service related disability of 10% or more by the Veteran Affairs. Please reference the VA Funding Fee Table in the section below for a detailed breakdown of the current VA related funding fees.
