Funding Fee for VA Loan
In addition to the zero down payment feature, the government limits the amount of closing costs, appraisal fees and origination fees lenders can charge our Oregon Veterans. Fees range from 1 1/4 percent to 3.15 percent, depending on the veteran’s service and whether it’s a first or subsequent loan. Contact our office in Salem to get more details on what your funding fee would be. The typical funding fee is around 2 percent. The VA will lower the fee if the borrower makes a down payment of at least 5 percent. Areas outside Portland, Eugene, and Bend have lowers sales prices and it might be easier to come up with a down payment on a smaller home.
Many buyers simply finance the fee into the home loan. The VA loan allows veterans 103.15 percent financing which can be used to roll in the funding fee. You should, however, consider the cost of financing the funding fee over the life of the mortgage.
For refinancing loans, the fee ranges from a half percent to 3 percent, with a half-percent being typical. In a refinance, where a new VA loan is created, veterans may borrow up to 90% of reasonable value, where allowed by state laws. In a refinance where the loan is a VA loan refinancing an existing VA loan (Interest Rate Reduction Refinance or IRRRL refinance) a vet may borrow up to 100.5% of the total loan amount. The additional half percent is the funding fee.
All closing costs and discount points may be paid by the seller, regardless of the amount. All other seller contributions are limited to 4% of the lesser of the purchase price or appraised value.