On February 16th, 2021, the Department of Veterans Affairs (VA) announced a change to the funding fee charged on VA loans. The funding fee is a one-time fee charged to borrowers using a VA loan to help offset the cost of administering the program. The new announcement stated that the funding fee would be lowered for first-time and subsequent use of the loan, effective April 1st, 2021. This change is expected to provide significant cost savings to veterans and service members using VA loans to purchase or refinance their homes.
- For first-time use: The old rate was 2.3% of the loan amount, and the new rate is 1.4% of the loan amount.
- For subsequent use: The old rate was 3.6% of the loan amount, and the new rate is 2.8% of the loan amount.
The VA estimates that the average savings for a first-time user will be around $1,000, while the average savings for subsequent users will be around $280. This change is a welcome relief for many veterans and service members, making the VA loan program even more accessible and affordable.
You may not need to pay the VA funding fee if you meet specific requirements, such as receiving VA compensation for a service-connected disability or Dependency and Indemnity Compensation as the surviving spouse of a Veteran.
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