Owen is using a VA-backed purchase loan for the first time. He is not exempt from the funding fee. He is buying a $400,000 home and making a 5% down payment. Using the current VA purchase-loan funding-fee chart, how much is the funding fee?
Correct Answer
B) $5,700
The correct funding fee is $5,700. Step 1: Calculate the loan amount: $400,000 − (5% × $400,000) = $400,000 − $20,000 = $380,000. Step 2: For a first-time VA purchase loan with a down payment of 5% or more, the applicable funding-fee rate is 1.5%. Step 3: $380,000 × 0.015 = $5,700.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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