VA Home Loan Fee Limits

VA Home LoanApril 13, 2017 The Department of Veterans Affairs (VA) released an advanced notice of proposed rulemaking regarding revisions to allowable charges and fees associated with VA guaranteed home loans. In recent years, the VA has received complaints from veterans and other stakeholders, including REALTORS®, that restrictions on the charges and fees VA Loan borrowers can pay in a home-purchase transaction are hindering the ability of VA borrowers to compete with other buyers in today’s housing market. The VA is considering ways to revise the list of acceptable charges and fees while still protecting the VA borrower, and is seeking public comment on how this should be done.

The last change to VA Home Loan Fee Limits came back in November 2011. The enactment of Public Law 112-56, signed November 21, 2011, establishes rates at the levels below.

Type of VeteranDown paymentPercentage for First time UsePercentage for Subsequent Use
Regular MilitaryNone
5% or more
10% or more
2.15%
1.50%
1.25%
3.3%*
1.50%
1.25%
Reserves/National GuardNone
5% or more
10% or more
2.4%
1.75%
1.5%
3.3%*
1.75%
1.5%

VA Home Loan Fee Limits & Benefits

1. Type of Homes
The VA Home Loan is designed It’s mainly designed for a property that’s move-in ready and doesn’t require extensive repairs. These homes include a single-family home, condo, modular and some multi-family units.

2. VA Loans can be reused
Your VA entitlement can be used over and over again as long as you pay off the loan each time. And you may be able to qualify for another VA Loan if you have a foreclosure.

3. Owner Occupied
These loans are not for investment properties or vacation homes, rather for owner occupied homes.

4. VA Loans not issued by the VA
The VA isn’t in the business of issuing home loans. Instead, the agency provides a guaranty on each qualified mortgage loan.

5. Guaranteed by the government
While the VA Loan is not issued by the Veterans Affairs department, they are guaranteed by the government. A VA entitlement helps guarantee up to 25 percent of the loan amount. This helps secure the best rate possible with other banks.

…And other features VA Home Loans Afford

6. Bankruptcy & Foreclosures, no problem
As mentioned previously, a service members with a history of bankruptcy or foreclosure can secure a VA Loan.

7. Mortgage Insurance Not Required
This is a big deal because your VA loan doesn’t require mortgage insurance. Those who have MI have to pay this fee each month until they reach 20% down on the value of the home.

8. Mandatory Fee
This is the current fee being debated at the VA. Since VA Loans don’t carry mortgage insurance, there is a VA Funding Fee. This fee (a percent of the loan) is charged to help float the program. This is a requirement for both purchase and refinance loans and can be rolled into the loan itself.

9. Limits for Co-Borrowers
If you are not married or have a non-veteran on the loan requires a down payment. This also caries by lender, so be sure to ask about their joint-loan stipulations.

10. No Prepayment Penalty
If you’re able to pay down your mortgage early, you can without penalty. The This allows the borrowers to add an extra payment each month to accelerate amortization of the loan.

For more details on VA Reconsidering Fee Limits, contact us today.