What is the cost of the guarantee made by the VA on a loan that covers 100% of the estimated property value?

The cost of the guarantee made by the Department of Veterans Affairs (VA) on a loan that covers 100% of the estimated property value is 2.15%. This percentage, known as the funding fee, is typically charged to help sustain the VA loan program, allowing it to continue to provide benefits to veterans and active-duty service members.

When a borrower is seeking a VA loan with no down payment (100% financing), the fee increases slightly as the risk to the lender is greater due to the lack of equity. The 2.15% fee is applied to the loan amount, and it can be financed into the loan, thereby not requiring an upfront payment from the veteran.

Understanding this percentage is crucial for veterans considering a VA loan, as it directly impacts the overall cost of borrowing. It allows them to have access to favorable loan terms without the burden of a down payment, while still contributing to the sustainability of the funding program.