As a veteran or active-duty service member, you may be eligible for a VA home loan. VA loans offer many benefits, including competitive interest rates and no down payment requirements. However, it’s important to understand the VA loan percentage and fees associated with these loans to make an informed decision.
VA Loan Rates
VA loan rates are typically lower than conventional loan rates, but they can fluctuate depending on market conditions. Your interest rate will also depend on your credit score, loan amount, and other factors.
It’s important to shop around and compare rates from different lenders to ensure you’re getting the best deal. You can use a mortgage calculator to estimate your monthly payments based on different interest rates and loan terms.
VA Loan Funding Fee
One of the fees associated with VA loans is the funding fee. This fee helps offset the cost of the VA loan program and is typically included in the loan amount.
The funding fee percentage varies depending on your service status, down payment amount, and whether you’ve used your VA loan benefits before. For first-time users with no down payment, the funding fee is 2.3% of the loan amount for regular military and 2.4% for National Guard and Reserve members. The fee is lower for subsequent use and for borrowers with a down payment.
VA Loan Origination Fee
Another fee you may encounter when getting a VA loan is the origination fee. This fee is charged by the lender to cover the cost of processing and underwriting the loan.
The VA sets limits on how much lenders can charge for the origination fee. Currently, the maximum allowable amount is 1% of the loan amount. However, some lenders may charge less or even waive the fee altogether.
VA Loan Discount Points
Discount points are a type of fee you can pay upfront to lower your interest rate. Each discount point is equal to 1% of the loan amount and typically lowers your interest rate by 0.25%.
While paying discount points can save you money in the long run, it’s important to consider whether it’s worth the upfront cost. You can use a mortgage calculator to see how much you’ll save over time with different interest rates.
VA Loan Assumption Fee
If you sell your home and the buyer assumes your VA loan, they may be required to pay an assumption fee. This fee covers the cost of processing the assumption and transferring the loan to the new owner.
The VA sets a maximum allowable assumption fee of 1% of the loan amount. However, the seller and buyer can negotiate who pays this fee as part of the home sale agreement.
VA Loan Refinance Fees
If you decide to refinance your VA loan, you may encounter additional fees. These can include an appraisal fee, title search fee, and other closing costs.
It’s important to compare the costs and benefits of refinancing to determine whether it’s the right choice for you. You can use a refinance calculator to estimate your savings based on different interest rates and loan terms.
VA Loan Limits
VA loans have limits on how much you can borrow based on your county and loan type. These limits can change each year and vary depending on whether you have a down payment or not.
It’s important to know your loan limits when shopping for a home to ensure you’re looking at properties within your budget. You can check the VA loan limits for your area on the VA website.
VA loans offer many benefits to veterans and active-duty service members, including competitive interest rates and no down payment requirements. However, it’s important to understand the VA loan percentage and fees associated with these loans to make an informed decision.
By shopping around and comparing rates from different lenders, you can ensure you’re getting the best deal on your VA loan. You can also use online calculators to estimate your monthly payments and savings based on different interest rates and loan terms.
Remember, the VA loan program is designed to help veterans and active-duty service members achieve homeownership. If you’re eligible, take advantage of this valuable benefit and work with a lender who specializes in VA loans.