A VA home loan is a mortgage product that allows certain military veterans, active-duty service members, and surviving spouses to purchase homes more affordably. One of the requirements when applying for a VA home loan is paying the VA funding fee.
The purpose of the fee is to fund the VA mortgage program nationwide. While borrowers can save money with this loan type, the VA funding fee will affect your upfront costs when buying a home in Georgia.
This fee is in addition to costs like the down payment, mortgage insurance, property taxes, and any fees due on the closing date. Your loan officer will work with you on your loan amount, monthly payment, and may explain things like a refinance loan.
However, the funding fee is VA compensation for the Department of Veterans Affairs, which has nothing to do with the purchase price. Your loan officer is still responsible for ensuring you know how to pay a funding fee. Often, you pay the lender, and they send it to the Department of Veterans Affairs.
Most veterans can also roll the cost into your mortgage. Veterans will wind up paying the fee off alongside their loan term. However, you may have to pay an interest rate like home loans. The interest rate will vary depending on your financial information.
VA Loans and Their Benefits for Georgia Homebuyers
This program is possible because the Department of Veterans Affairs insures certain loans, allowing lenders to offer better terms. Once you select a lender, you can enjoy the zero-down payment option, more competitive interest rates, and no private mortgage insurance (PMI). With these benefits, buying a home in Georgia is far more accessible.
Whether you are searching for a home in the rural areas of the Peach State or metro Atlanta, a VA home loan is the best financing option.
Overview of the VA Loan Funding Fee in Georgia
If you are a Georgia homebuyer and purchase your house with a Georgia VA mortgage, you must pay the VA funding fee at closing. By paying this payment during your home purchase, you help maintain funding for the program so future borrowers can take advantage of a VA mortgage.
VA Loan Funding Fee Rates in Georgia
The cost of the VA funding fee depends primarily on your status as a first-time homebuyer and the down payment amount. For example, most first-time homebuyers who use VA mortgages will pay a VA funding fee of 2.15% with no down payment.
For a second loan, the payment required rises to 3.3%. If your down payment is below 5%, the funding fee will be 2.15%, but it will decrease to 1.25% with a 10% down payment.
Who Pays the VA Loan Funding Fee in Georgia?
The borrowers pay the funding fees on VA loans. Whether you are a veteran, active military service member, or surviving spouse, you must cover this fee at closing. It is possible to roll the cost of the VA funding fee into your loan amount, and some exemptions allow certain borrowers to waive VA funding fees.
VA Loan Funding Fee for First-Time Homebuyers in Georgia
If you purchase a home with a VA mortgage for the first time, your VA funding fee rate will be lower. With a zero-down payment, the funding fee will likely cost about 2.15% of the cost of the home. If you purchase in a rural area for $100,000, this would amount to $2,150. A more expensive home in Atlanta that costs $400,000 would mean a VA funding fee of $8,600.
VA Loan Funding Fee for Subsequent Use in Georgia
If you have purchased a home in the past with VA loans, subsequent purchases will have higher funding fee rates. In general, a second loan will have a fee of 3.3%. For a $100,000 house, this will cost you $3,300. The $400,000 property would result in a funding fee of $13,200.
Exemptions from the VA Loan Funding Fee in Georgia
Exemptions are available for certain parties who can avoid paying VA funding fees. Disabled veterans, Purple Heart recipients, and surviving spouses often qualify for these exemptions for VA loans, so ask your lender about waiving the funding fee if you belong to one of these groups.
How to Apply for a Funding Fee Exemption in Georgia?
Applying for a funding fee exemption requires sending forms to the VA. You must complete the Verification of VA Benefits form, provide your claim folder or service number, and send the forms to the VA. It’s crucial to complete this process long before the closing date. You may have to pay the fee upfront and apply for a refund, typically processed within ten days.
Reducing the VA Loan Funding Fee in Georgia
The best way to reduce the funding fee is to pay a larger down payment. This will also reduce the amount of interest you pay. A down payment of at least 10% could drop the fee to 1.25%, while a zero-down payment may raise it to 2.5%.
Paying the VA Loan Funding Fee in Georgia
Paying the funding fee upfront will increase your home purchase costs. You can always roll the cost into the loan, but this will increase your total loan balance and interest payments. Lenders typically collect the funding fee and send it to the VA.
VA Loan Funding Fee Refunds for Georgia Borrowers
If you qualify for an exemption but must pay the fee upfront when your mortgage is processed, you can pursue a refund from the VA. If you ask your lender or the nearest VA Regional Loan Center, this retroactive exemption is possible.
How Does the VA Loan Funding Fee Impact Affordability in Georgia?
A more expensive home will result in a fee worth thousands of dollars, especially in hotter markets. In Atlanta, borrowers could pay five figures for the funding fee, while buyers in rural areas may only spend a few thousand dollars.
Funding Fee vs. Other Loan Costs in Georgia
The funding fee is just one of many closing costs borrowers must pay to finalize a real estate transaction. However, the funding fee is still a better alternative than fees for other types of loans. For example, private mortgage insurance for a conventional or FHA loan is comparable to the VA funding fee, but the long-term savings for these loans are less enticing.
How Does the Georgia Housing Market Influence the VA Loan Funding Fee?
In a more expensive market, house prices will increase the funding fee even if the rate is the same, resulting in higher upfront costs. The same percentage in rural areas will lead to lower fees because home values are lower.
VA Loan Funding Fee for Refinancing in Georgia
Refinancing is a great way to improve your financial situation. A cash-out refinance on a VA home loan typically costs 2.15% for the first refinance and 3.3% for additional refinances. A streamline refinance funding fee will cost about .5% for all borrowers.
Example VA Loan Funding Fee Calculation in Georgia
Say you are purchasing a home in Augusta, where the median home price is $203,000. A first loan’s funding fee with a zero-down payment would cost $4,365 (2.15%). For a first-time homebuyer in Columbus, whose median price is $210,000, that number rises to $4,515.
Common Mistakes to Avoid with the VA Loan Funding Fee in Georgia
Many Georgia homebuyers make mistakes regarding the VA funding fee. For example, many do not realize they would qualify for an exemption, which would save them thousands. Additionally, you can spread the costs out by rolling the fee into the loan, saving you money upfront.
VA Loan Funding Fee and Closing Costs for Georgia Buyers
The average closing costs for buyers in Georgia are roughly 2-5% of the home’s sale price. While some fees may not apply with a VA mortgage, the funding fee does impact your upfront costs. Make sure you budget for this amount and the other closing costs.
VA Loan Funding Fee for Disabled Veterans in Georgia
If you are a disabled veteran, you could be exempt from paying this fee when you buy a home in Georgia. Send the appropriate forms to the VA to verify your benefits, exemption status, and military service to apply for the exemption. If it takes too long, you can apply for a refund from the VA.
Impact of VA Loan Funding Fee on Jumbo Loans in Georgia
Some higher loan amounts may qualify as jumbo loans in Georgia. The funding fee for a jumbo loan typically falls between 2.15% and 3.3%, but this will depend on the down payment size. The jumbo loan limit in most counties is $806,500, so the funding fee could cost between $17,340 and $26,615.
How Does the Funding Fee Support Georgia’s VA Loan Program?
Almost all VA mortgage borrowers pay the funding fee. These funds help the federal government insure future loans for new borrowers, ensuring qualified buyers can still access benefits like low down payments, low interest rates, and no mortgage insurance.
Federal and State Regulations on the VA Loan Funding Fee in Georgia
The funding fee is a mandatory closing cost for all borrowers unless they qualify for an exemption. The regulations for this fee are based on the VA and federal government. Individual lenders are responsible for enforcing their qualification requirements, so the state has little influence on these expenses.
Recent Changes to the VA Loan Funding Fee for Georgia Borrowers
The last time the funding fee rates were changed nationwide was in 2023. At that time, the primary rates were decreased to 2.15% for first-time buyers with no down payments and 3.3% for subsequent loans with no down payments.
Preparing to Pay the VA Loan Funding Fee in Georgia
When you purchase a Georgia home with a VA mortgage, you must be financially prepared to pay this fee. You can either include it in your budget and save enough to cover it upfront or adjust your monthly costs and roll it into the loan.
Conclusion
Navigating the VA funding fee is much easier with the right lending partner. You should understand your options for paying it, your exemption status, and reduction strategies. TrueWay Mortgage can walk you through the VA loan process with personalized customer service and vast experience in Georgia housing markets.
Call us today at 404-962-0032 to learn more about the VA funding fee.
