VA Home Loans

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VA home loans are a type of mortgage loan available to eligible veterans, active-duty service members, and some surviving spouses. These loans offer a range of benefits to those who have served our country, including no down payment, lower interest rates, and more lenient credit requirements. However, there are some important considerations to keep in mind when applying for a VA home loan.

One of the most significant costs associated with a VA home loan is the funding fee. The funding fees are as follows:

Loan Fee Rates for Loans Closing On or After April 7, 2023 and prior to November 14, 2031:

VA Purchase or Construction Loans

Down Payment Amount Funding Fee Percentage

First Use

Less than 5% 2.15% 

5% or more 1.5% 

10% or more 1.25% 

Subsequent Use 

Less than 5% 3.3% 

5% or more 1.5% 

10% or more 1.25% 

VA Cash-Out Refinance Funding Fee Percentage

First Use 2.15% 

Subsequent Use 3.3% 

Other VA Home Loan Types Loan Type Funding Fee Percentage

Interest Rate Reduction Refinance Loan (IRRRLs) 0.5% 

Manufactured Home Loans (not permanently affixed) 1%

Loan Assumptions 0.5% 

Native American Direct Loan (Non-IRRRL) 1.25% 

     Another important factor to consider when applying for a VA home loan is residual income. Residual income is the amount of money a borrower has left over each month after paying all major expenses, such as mortgage payments, utilities, and food. VA lenders use residual income to ensure that borrowers have enough money to cover their living expenses after making their mortgage payments. The required residual income can vary depending on factors such as the size of the borrower's family and the location of the property.

     Finally, it is worth noting that VA loans can also be eligible for streamline refinances. Streamline refinances allow borrowers to refinance their existing VA loan with minimal documentation and paperwork. The primary goal of a streamline refinance is to lower the borrower's interest rate and monthly payment, making the loan more affordable over time. Streamline refinances are available to borrowers who are current on their payments and have a history of making timely payments.

     VA home loans offer a range of benefits to eligible veterans and their families. These benefits include no down payment, lower interest rates, and more lenient credit requirements. However, there are some important factors to consider when applying for a VA home loan, such as the funding fee, residual income requirements, and eligibility for streamline refinances. By understanding these factors and working with a knowledgeable VA lender, veterans and their families can take advantage of the many benefits of VA home loans and achieve their dream of homeownership.