VA Mortgage Loans

Overview

VA mortgage loans are available to eligible American veterans or their surviving spouses (provided they do not remarry). Loans are guaranteed by the United States Department of Veteran Affairs (VA) and issued by qualified lenders. Union Square Mortgage is a qualified lender.

VA loans allow veterans to qualify for loan amounts larger than traditional GSE conforming loans. The VA will insure a mortgage where the monthly payment of the loan is up to 41% of the gross monthly income vs. 28% for a conforming loan assuming the veteran has no monthly bills.

The maximum VA loan guarantee varies by county and is adjusted annually by the FHFA. As of 1 January 2022, the maximum VA loan amount with no down payment is usually $647,200, although this amount may rise to as much as $970,800 in certain specified "high-cost counties."

Additional Details

Down Payment: 0% down and no PMI required

Loan Term: 15-year or 30-year term

Credit Requirements: The credit score requirement is impacted by a buyer’s down payment. A 3.5% down payment requires a minimum credit score of 580. If a buyer is capable of making a 10% down payment, a minimum credit score of 500 may be accepted.

Funding Fee: This fee paid to the VA is unique to VA mortgage loans and varies based on specific factors. Veterans who receive a minimum 10% VA disability compensation are exempt from paying a funding fee.

Closing costs: The various closing costs—appraisal, credit report, loan processing fee, title search, title insurance, recording fees, transfer taxes, survey charges, and/or hazard insurance—may not be “rolled-into” the loan.

VA Funding Fee Rate Charts

Effective January 1, 2020, based on Public Law 116-23

Down payment and VA funding fee amounts are expressed as a percentage of the total loan amount.

For example: If a member uses a VA-backed loan for the first time, buys a $200,000 home, and makes a down payment of $10,000 (5% of the $200,000 loan), he/she will pay a VA funding fee of $3, 135 or 1.65% of the $190,000 loan amount. The funding fee applies only to the loan amount, not the purchase price of the home.

Please see the VA funding fee charts below for details.

VA-Backed Purchase and Construction Loans

Rates for Veterans, active-duty service members, and National Guard and Reserve members

Note: Members who used a VA-backed or VA direct home loan to purchase a manufactured home in the past must pay the “first use” funding fee.

VA-backed Cash-Out Refinancing Loans

Rates for Veterans, active-duty service members, and National Guard and Reserve members

First Use	After First Use
2.3%	3.6%

Note: The VA funding fee rates for refinancing loans don’t change based on the down payment amount. Members who used a VA-backed or VA direct home loan to purchase a manufactured home in the past pay the “first use” funding fee.

Other VA Home Loan Types

Loan Type	VA Funding Fee
Interest Rate Reduction Refinancing Loans (IRRRLs)	0.5%
Manufactured home loans (not permanently affixed)	1%
Loan assumptions	0.5%
Vendee loan, for purchasing VA-acquired property	2.25%

Note: The VA funding fee rates for the above listed loans do not change based on the amount of a member’s down payment or if the member has used the VA loan program in the past.

The VA funding fee can be financed directly into the maximum loan amount for the county in which the home is located. If the sales price and the financed VA funding fee total more than the maximum loan amount for that county, the borrower or seller must pay for the fee out of pocket. All VA loans require an impound account for property taxes and homeowners insurance. A VA loan monthly payment consists of principal, interest, taxes, and insurance (PITI).

Speak with a Union Square Mortgage professional to learn if a VA loan is the right mortgage product for you!