VA Loan Funding Fee Changes
 
The Department of Veterans Affairs has announced lower VA loan funding fees for active duty, Guard and Reserve veterans effective October 1, 2011.

According to a VA circular posted at VA.gov, “For loans closed on or after October 1, 2011, the fee for subsequent use loans with less than 5 percent downpayment and subsequent use regular refinance loans will be 2.8 percent for both active duty Servicemembers, Veterans, and persons qualifying based solely on service in the Reserves or National Guard.”

The changes in the VA loan funding fee are prompted by legislation. According to the VA, “This change is due to passage of Public Law 112-26, Restoring GI Bill Fairness Act of 2011.” Additionally, “Funding fees for loans other than subsequent use will also change for loans closed on or after October 1, 2011. These fee changes were already set to change based on previous legislation.”

Here is a list of the changes to the VA loan funding fees. In some cases the active duty, Guard and Reserve fees are the same, and in other cases active duty members pay a lower VA loan funding fee than their Guard/Reserve counterparts. Some changes go into effect on October 1, 2011 and are not scheduled (at the time of this writing) to change again, while others will be lowered even more in coming years as described here.

VA Loan Funding Fees:

Down payment less than 5 percent:

October 1, 2004 until October 1, 2011

Active Duty – 2.15%
Guard/Reserve – 2.40%

On or after October 1, 2011 changed to:

Active Duty – 1.40%
Guard/Reserve – 1.65%

At least 5 percent but less than 10 percent down payment:

– Before October 1, 2011

Active Duty – 1.50%
Guard/Reserve – 1.75%

On or after October 1, 2011 changed to:

Active Duty – 0.75%
Guard/Reserve – 1.00%

10 percent or more down payment:

Before October 1, 2011

Active Duty – 1.25%
Guard/Reserve 1.50%

On or after October 1, 2011 changed to:

Active Duty – .50%
Guard.Reserve .75%

Second or subsequent use VA loan funding fees are the same for both active, Guard and Reserve as follows:

Less than 5 percent down payment:
– October 1, 2007 until October 1, 2011
3.30%

– October 1, 2011 until October 1, 2012
2.80%

– October 1, 2012 until October 1, 2013
2.15%

– On or after October 1, 2013 changed to:
1.25%

At least 5 percent but less than 10 percent down payment
– Before October 1, 2011

Active Duty – 1.50%
Guard/Reserve – 1.75%

On or after October 1, 2011 changed to:

Active Duty – 0.75%
Guard/Reserve – 1.00%

10 percent or more down payment

– Before October 1, 2011

Active Duty – 1.25%
Guard/Reserve – 1.50%

– On or after October 1, 2011 changed to:

Active Duty – 0.50%
Guard/Reserve – 0.75%