In an effort to make mortgage costs more bearable The U.S. Department of Veterans Affairs (VA) therefore reduced VA funding fees.
This applies to VA loans used for home purchases or new construction. and even cash refinancing. That likely won’t be used now with interest rates as high as they are now.
Pay a one-time fee to reduce the cost of Virginia Loan For taxpayers in the United States, due to VA home loan programs, monthly mortgage insurance is not required.
It can be paid off all at once or combined with a loan and paid off over time by financing.
For loans closed on or after April 7, 2023, VA financing fees are reduced by 15 to 30 basis points (.15% to .30%).
New VA fundraising fees for 2023
The image above is a chart of the new VA funding fees that apply to VA loans closed on or after April 7, 2023, and before November 14, 2031, which was announced at Virginia Wien 26-23-06.
as you can see Those placing less than 5% on a VA-backed home purchase will pay a 2.15% funding fee.
Depending on the loan amount, this is usually the purchase price since the VA loan. No down payment required.
The new fee is 15 basis points less than the current fee of 2.30% for home purchases with a down payment of less than 5%.
To buy a home worth $300,000 with no down payment. We’re talking $6,450 versus $6,900 in financing fees.
So you save $450 at account closing or funding for funding fees. And pay a little more each month through a slightly larger loan ($306,450 vs. $306,900).
If you put up 5% on the same purchase worth $300,000, the crowdfunding fee drops to 1.5% from $4,703 to $4,275. That’s a savings of $428.
It’s not a major difference, but every little bit helps. especially with house prices and mortgage rates quite high
Those using a VA loan for the second time (Subsequent use) will receive a larger funding fee if the reduction is less than 5% for such borrower. It is currently at 3.6% with a down payment of less than 5%, but will drop to 3.3%.
This is a bigger improvement (.30%), but with a caveat: if you place a down payment of 5% or more, the funding fee will match the fee. “first use”
So it’s better to go down 5% to get a better price than 1.5% regardless.
Still, on April 7th, 2023, this fee will be reduced from 1.65% to 1.5%, savings.
Old VA Fundraising Fee Chart
The image above is a chart of the old VA financing fees effective January 1, 2020, and before April 7, 2023.
This may last for a few weeks. or until the lender decides to include the new price as Home loans typically take a month or more from start to finish..
For the record, funding fees can be avoided in some cases for eligible veterans or their surviving spouses.
And there are reduced funding fees for Refinance Rates and Term (IRRRL) of .50% for Loan Assumptionsas well .50% and for manufactured homes 1% as well as Native American direct loans.
earlier this week The US Department of Housing and Urban Development (HUD) also revealed. Lower mortgage insurance premiums for FHA loans.
Annual mortgage insurance premiums are reduced by 30 basis points (.30%), saving the average homebuyer about $70 per month, or over $800 per year, and even more for a larger loan amount.
Although these reduced fees are not necessarily game-changers. But it can help alleviate some of the burden in a difficult home buying environment.
Read more: Top VA Loan Lenders by Loan Volume