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The U.S. Department of Veteran Affairs (VA) has announced that they are reducing the funding fee on VA loans. The fee change will impact VA loans that close after April 7, 2023.  Purchases, construction loans and cash out refinances backed by the VA will all benefit from the reduced fee. The funding fee is applicable on all VA home loans however if you are a disabled veteran you may qualify for a VA loan without the funding fee.

The change to the VA funding fee comes on the heels of a decrease to FHA mortgage insurance pricing as well as a change to Loan Level Price Adjustments (LLPA) which benefits less qualified buyers.

What are VA Home Loans?

A VA home loan is a benefit that United States active duty service members, veterans and surviving spouses are all eligible for. The goal is to help these individuals find home ownership for personal occupancy.

A VA home loan is funded by a private lender but a portion of the loan is guaranteed by the VA. There are a number of benefits associated with VA home loans:

  • No down payment required
  • No PMI required
  • Competitive interest rates
  • Minimal closing costs
  • Lifetime benefit

VA Loan Origination Fee

In addition to the funding fee, which is a fee required by the VA, they also allow a lender to charge up to a 1% loan origination fee on the loan. Unlike the funding fee, the loan origination fee goes directly to the lender. Legacy Mortgage has made the decision to never charge a loan origination fee to our veterans. If you are applying for a VA loan you might be surprised that there are a variety of lenders who can help with your loan and you can ask each one if they charge a loan origination fee.  

On a home that is $300k the loan origination fee can be as much as $3,000. This is a notable savings on a loan that will benefit your home equity immediately.

Many home buyers don’t realize that the loan pricing on a VA loan can vary from lender to lender. It can also come as a surprise that a local lender is the best choice for a VA loan rather than a national lender. Taking the time to talk to an experienced mortgage broker who can look at a variety of loan programs on your behalf will help you understand which loan program is best and remember to always ask about the loan origination fee on a VA loan.

If you are looking to buy a home in the Upper Valley with a VA home loan, you need a team of local real estate experts on your side. Our team is well versed in a variety of loan programs including fixed mortgages, ARMs, VA loans, FHA and more! We have the privilege of partnering with the best local agents, appraisers and attorneys the Upper Valley has to offer. When you work with Legacy Mortgage you are working with the best local professionals from beginning to end. Reach out to the Legacy Mortgage team to get the loan process started. Call us today, 603-643-7400.