FHA Loan

If you served in our nation’s armed forces, and are considering the purchase of a home, costs just got cheaper last week.  On November 18, 2011, the Veterans Administration reduced the funding fee, which is the amount it charges veteran home buyers, to guaranty the mortgage.  VA home loans allow for no down payment and low down payment mortgages, with no privsate mortgage insurance (PMI).  Rather, the VA charges a one-time funding fee, and allows for that funding fee to be financed, to insure the loan.

First-time VA home loan users, purchasing with no money down, used to pay 2.15%; that was reduced to 1.4%.  Subsequent VA home loan users, purchasing with no money down will now pay 2.8%, down from 3.3%.

Some frequently asked questions:

Can you use your VA loan guaranty benefit more than once?

Of course you can.  The VA even allows for two outstanding loans (under certain circumstances) but generally, veterans can only have one VA loan outstanding.  A common misunderstanding is that a veteran can only use a VA loan once.  The benefit can be used as many times as the veteran wishes.

Can you still get a zero-down VA home loan, again?

Indeed you can.  The funding fee is higher and you generally can’t have more than one VA mortgage outstanding but you can qualify for a VA-insured, no money down home loan, again.

Can you lower the funding fee if you use a down payment?

Yes you can.  If veteran home buyers put 5% down, with a VA loan, the funding fee drops to .75% for active duty veterans (1.0% for reservists and guardsmen).  For a 10% down payment, the funding fee drops to .5% for active-duty veterans and .75% for reservists and guardsmen.

A full chart of the new VA funding fee schedule is available on Brian Brady’s Mortgage Rates Report.  Please direct any and all questions via telephone to (858)-777-9751