VA Funding Fee

While VA loans don’t require a down payment they do have a 2.15% funding fee due at closing on a first time use. If you have a subsequent loan the fee increases to 3.3%. This is significant considering there are 3% down Conventional loans available and 3.5% FHA loans. The funding fee is used to support the VA loan system and to insure the lender in the event the borrower stops making payments.  

You may hear of this funding fee referred to as VA loan mortgage insurance or VA PMI as well, they are the same thing. Although not required, if you do put between 5 and 10% down the funding fee is reduced to 1.5%.  

The funding fee can be rolled into the loan.  Be careful, I’ve seen lots of VA borrowers close with a loan larger than the sale price. This comes from no money down and financing the funding fee. You could be in trouble if you have to sell quickly in this case. Dayton, Ohio is a military town due to Wright Patterson Air Force Base being here and VA loans are very common. In my 3 decades long career as a Realtor I’ve helped hundreds of veterans buy and sell homes. If you need help figuring the best route forward with your financing please reach out to me.