VA home loan guaranties are issued to help eligible service members, veterans, reservists and certain unmarried surviving spouses obtain homes, condominiums, residential cooperative housing units, and to refinance loans.

A VA guaranty helps protect lenders from loss if the borrower fails to repay the loan.

The VA funding fee must be paid to VA unless the veteran is exempt from such a fee because he or she receives VA disability compensation, usually accompanied by a Service Connected VA Disability Rating of 10% or higher. The funding fee may be paid in cash or included in the loan.

The VA funding fee is currently set at 2.15% for first-time use, and 3.30% for any subsequent use. (Yes, a qualified veteran may use his VA and/or CalVet loan multiple times!)

“The President signed H.R. 2646, Veterans Health Facilities Act Capital Improvement Act of 2011 on October 5, 2011. The bill includes a provision resulting in funding fees reverting to the same rates that existed prior to October 1, 2011 for loans
closed October 6, 2011 through and including November 17, 2011.

The possibility of Future Funding Fee Changes – VA believes it likely that Congress will pass other legislation in the coming weeks that will make additional changes to the funding fee structure. Should this occur, VA will immediately publish a notice.”

Due to legislation affecting funding fees that has passed both houses of Congress and is awaiting the President’s signature, lenders should not submit payments for loans closed on or after October 1, 2011, until further notice. This issue should be resolved within the next several days. If the President signs the legislation, it will in effect keep funding fees at their FY2011 rates through November 17, 2011. This means the changes set to take effect per Circular 26-11-12, might only be in effect for a very short time.

For cases where lenders have closed loans with lower funding fees than provided in the new bill, the Secretary, under existing authority, will waive the difference in the fees.

PLEASE monitor this page for updates. We will pass on information as soon as we get it and also release a circular if and when the bill is signed.