Finding The Right Loans

How Much Money Do You Need To Close On A VA Loan?

19 March 2020

April George

VA loans are not for everyone, but they are ideal for anyone with military experience. If this is the type of mortgage you would like to get, you might want to start by evaluating the costs of the loan. Assessing the costs can help you determine how much money you'll need to come up with for closing on the loan. Here are several things to know about VA loan closing costs and other expenses to help you determine how much cash you'll need to close on the mortgage.

Funding Fee for the VA

When taking a VA loan, you must pay a funding fee. This fee is what the Department of Veterans Affairs (VA) requires for all borrowers, and it helps the VA cover the cost of default on loans. There are two things to know about this funding fee, though:

1. The amount varies: You should expect to pay between 1.4% to 2.3% of the loan amount. The fee varies by the down payment amount you provide. If you do not provide a down payment, you pay the highest rate. If you give a higher down payment, you'll pay a lower fee.
2. You can roll it into the mortgage: The second thing to know is that you do not have to pay the fee out of pocket when you close. You can roll it into the loan instead.

There is no way to get out of paying this funding fee if you select a VA loan.

Loan Origination Fees

Next, you will also pay a 1% loan origination fee. To determine the cost for this fee, you should multiple the loan amount by 1%. This fee is what lenders charge for offering you a mortgage. You cannot get out of this fee either, but you can roll it into the loan to avoid paying it upfront.

Down Payment Amount Necessary

Finally, you should understand that you do not need a down payment to get a VA mortgage. You can get one without putting money down. You will save money, though, if you can afford to put at least a 5% or 10% down payment on the property when purchasing it.

You could get a VA loan without having any cash on hand if this is what you want to do. If you have questions about these loans or other types of mortgages, talk to a lending institution today about your situation.

Share  

Search