VA Loans in Wisconsin Illinois Minnesota and Florida: Step 3 of 5: VA Funding fee

Today we will review step 3 of our 5 step series about obtaining a VA loan. With so much information out there, I have never actually seen anything that explains the entire process of obtaining a VA loan in one place.

1. Service Eligibility
2. Obtaining your Certificate of Eligibility
3. Funding Fee
4. Choosing a Lender
5. Looking for a house

In yesterday’s post we discussed Step 2 Certificate of Eligibility. Today we will discuss the VA Funding fee, step 3:

The Veterans Administration works off of a “guaranty”, meaning that they pay the lender 25% of the loan amount should the veteran default on their mortgage. This is the main reason the VA loan program still requires no money down. The VA doesn’t make loans, lenders do and the VA guarantees the lender that if a VA mortgage should go into foreclosure, the VA guarantees to the lender 25%.

View the current VA Funding Fee (PDF)

The VA makes things pretty simple when it comes to their loans. First, there is no monthly mortgage insurance on VA loans and secondly, the VA funding fee can be rolled into the loan so that you don’t have to bring in additional money to closing to pay for it.

Who is exempt from the VA funding fee?

A veteran may be exempt from the funding fee and VA Form 26-8937, Verification of VA Benefits must be completed by your lender if one of the following apply:

- Veteran receiving VA compensation for service-connected disabilities.
- Veteran would be entitle to receive compensation for service-connected disabilities if they did not receive retirement pay.
- Surviving spouse of a veteran who died in service for from service-connected disability.
- Has received a VA disability in the past.

If you think you are exempt or you are not sure, let us know and we can fax VA Form 26-8937 to the VA for confirmation. The turnaround time is usually 24-48 hours before we would know for sure.

What’s Next?

Now that you understand how the VA funding fee works, the next step would be choosing a lender. I will go in depth on how to do this in tomorrow’s blog post, Step 4 Choosing a Lender.

For additional information or to see if you qualify, contact me below or apply online!