The funding fee varies based upon the term of the loan, the existence of any down payment, the term of the loan and the type of borrower. For first time VA borrowers taking out a 30 year fixed rate, the funding fee is 2.15% of the appraised value of the property.
Eligible borrowers for the VA home loan program include veterans of the armed forces, National Guard and
Armed Forces Reserve members with at least six years of service and unremarried surviving spouses of those who died while serving or as a result of a service related injury. The VA loan can only be used to finance a primary residence and may not be used to finance a vacation property, second home or rental.
The VA home loan program also restricts the types of closing costs the borrower is allowed to pay. The borrower may only pay for an appraisal, credit report, title insurance, origination fee, recording fee, survey and abstract. All other fees must be paid by others, either the sellers or with a lender credit.