The VA Loan Cost Most Veterans Do Not Know About Until They Are Already in the Process

Veterans and active duty service members who are using or planning to use their VA home loan benefit need to know about the funding fee. It is a real cost attached to every VA loan and understanding how it works and whether you are exempt from it is a conversation worth having before you are sitting at the closing table.

What the VA Funding Fee Actually Is

The VA funding fee is a percentage of the loan amount that helps sustain the VA home loan program for future generations of veterans. Unlike many other loan costs it can be handled in two ways. It can be paid in full at closing alongside other closing costs or it can be rolled into the loan balance and financed over the life of the loan. Neither option is universally better and the right choice depends on the borrower's cash position and long-term plans for the property.

The percentage itself is not fixed. It varies based on two primary factors. Whether you are using your VA home loan benefit for the first time or for a subsequent use and the size of your down payment if you are making one. First time use carries a lower funding fee than subsequent use and putting down five percent or more reduces the fee further.

The Exemption That Saves Veterans Thousands of Dollars

Here is what every veteran needs to know before assuming the funding fee applies to them. If you are service connected or have a service connected disability rating you are exempt from the VA funding fee entirely. You do not pay it at closing and you do not finance it into the loan.

That exemption can save thousands of dollars depending on the loan amount. On a three hundred thousand dollar loan the funding fee can easily exceed five thousand dollars. On a larger loan the savings from the exemption are proportionally larger. For veterans with a service connected disability rating who do not know about this exemption it is one of the most impactful pieces of information they can receive before beginning the loan process.

What to Do If You Are Unsure About Your Exemption Status

If you are not certain whether you have a qualifying service connected disability rating or whether your current rating makes you exempt from the funding fee that is exactly the conversation to have with Mark Clark before your application is submitted. Getting this right upfront ensures the fee is correctly applied or correctly waived rather than discovering an error after the fact.

Reach out to Mark Clark to learn more about your VA home loan benefit, understand your funding fee situation, and find out whether you qualify for the exemption that could save you thousands of dollars on your next home purchase.

Sources

VA.gov
MilitaryOneSource.mil
ConsumerFinancialProtectionBureau.gov
MortgageNewsDaily.com
Investopedia.com