Can the VA funding fee be financed?

Veteran with familyVeterans who get disability compensation or have a disability rating of 10% or above are free from paying the VA financing fee. Purple Heart recipients will also be eligible for a VA financing charge exemption beginning January 1, 2020, when receiving a VA home loan.

The down payment and whether the veteran is utilizing the VA loan program for the first time or reusing the VA loan program determine the funding costs.

According to the VA:
If any of the following characteristics apply to you, you will not be required to pay a VA funding fee:

A member of the armed forces serving on active duty who can provide evidence of receiving the Purple Heart before or on the loan closing date.

A service member with a suggested or memorandum rating indicating that you are entitled to compensation owing to a pre-discharge claim, or

If you are qualified for VA compensation for a service-connected disability but are already receiving retirement or active-duty pay,

Receiving VA benefits as a result of a service-related disability, or

You are the surviving spouse of a Veteran who died in the line of duty, had a service-connected disability, or was totally disabled and are receiving Dependency and Indemnity Compensation (DIC)

 

SOURCE: U.S. Department of Veterans Affairs

Here's a chart of the "new VA funding fee" percentages as of January 1, 2020. You can calculate the VA funding fee with the VA loan calculator.

VA funding fee schedule as of 2020


 


How to calculate the VA funding fee

Sales Price = $100,000
Less down payment (if zero) = $0
Loan Amount = $100,000.00

Now multiply the mortgage amount by the VA funding fee percentage. For this example, we'll assume zero down payment and the veteran earned his or her eligibility as an active duty (regular military) veteran; and no down payment. Multiply the mortgage amount X funding fee percentage:

Loan Amount = $100,000
X VA funding fee percentage 2.30% $2,300.00
Final Loan Amount = $102,300.00

The funding fee is financed into the mortgage amount (or you can pay the fee in cash).

Your mortgage payment will be based on the Final Loan Amount of $102,300

Frequently Asked Questions About the Veterans Administration Funding Fee

Q. Am I exempt from the VA funding fee?
A.
The lender completes Form 26-8937 to confirm any disability payments you are receiving. The form is sent to the VA for verification.

The certificate of eligibility (COE) can indicate the funding fee waiver status and display the monthly VA disability compensation amount. Upon receiving a COE with a funding fee “exempt” status, the lender will take off the funding fee from the VA loan closing-costs

Q. Can a VA funding fee be financed
A.
The funding fee is typically financed

Q. Do I have to pay a VA funding fee?
A.
Every veteran and other eligible applicants are required to pay the funding fee, unless the applicant(s) meets the one of the funding fee waivers.

Q. Why is there a VA funding fee?
A.
The funding fee is used to support the VA loan program and reimburse lenders for bad loans