A veteran using the benefit for the first time buys a $320,000 home with nothing down and is not receiving disability compensation. Assuming no funding-fee exemption applies, what fee rate and dollar amount apply to this first-use, zero-down purchase?
Correct Answer
A) The funding fee is 2.15% of the loan, or $6,880
On a first use of the benefit with less than 5% down the VA funding fee is 2.15%, which on $320,000 is $6,880 and may be financed into the loan. Other choices: 3.3% is the rate after a first use with less than 5% down; 1.25% applies where the veteran puts 10% or more down, whether or not it is a first use; and 1.75% is the FHA upfront premium, which is a different program. Source: VA funding fee table, rates effective 7 April 2023
Why This Is the Correct Answer
On a first use of the benefit with less than 5% down the VA funding fee is 2.15%, which on $320,000 is $6,880 and may be financed into the loan. Other choices: 3.3% is the rate after a first use with less than 5% down; 1.25% applies where the veteran puts 10% or more down, whether or not it is a first use; and 1.75% is the FHA upfront premium, which is a different program. Source: VA funding fee table, rates effective 7 April 2023
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