This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!
Question: Are funding fees on VA loans eligible for seller credits?
Answer: Loans guaranteed by the Department of Veterans Affairs are known as VA Loans and provide current and former service members with an opportunity to purchase a home with as little as 0% down.
In addition to the normal closing costs (title fees, transfer taxes, etc.), a funding fee is charged at settlement, which is equal to anywhere from 1.25-3.3% of the loan amount, depending on size of down payment, type of service and whether or not it’s the borrower’s first time using the VA loan program.
It’s a fee paid to the VA on every loan to offset the cost of loans that default (similar to mortgage insurance on non-VA loans). Disabled veterans are eligible to have the entire fee waived.
In a previous column, I explained how buyers can negotiate for seller credits to reduce or eliminate the out-of-pocket expense of closing costs at settlement. Fortunately, the funding fee falls into this category, along with the rest of the standard closing costs associated with a VA loan, and buyers are eligible to have all of these costs covered by the seller.
In theory, if a buyer is able to negotiate 100% of closing costs paid by the seller and chooses a 0% down payment loan, a home can be purchased cash-free.
If you’re unable to negotiate seller credits to cover the funding fee and are concerned about having the cash to pay for closing costs, you’re also allowed to roll the funding fee into your mortgage so that it becomes part of your monthly payment.
Some Other Facts about VA Loans You May Not Know
- Financing is available up to $1,500,000, just not at 0% down
- You can use your VA entitlement more than once
- VA loans are assumable (can transfer from seller to buyer at seller’s rates) which is a big deal in today’s market because rates have been increasing steadily
- Adjustable Rate Mortgages (ARM’s) are also available, not just fixed-rate
Arlington Veterans Affairs (VA) Loans by the Numbers
- In 2017, 261 of 3,130 buyers (8.3%) used a VA loan. By comparison, 2,173 used a Conventional loan (69.4%)
- The average purchase price for homes purchased using a VA loan was just over $615,751
- 38% of VA loans were used to purchase a condo, 29% to purchase a townhouse and 33% to purchase a single-family home
- On average, buyers using a VA loan negotiated 2.3% off the original asking price. By comparison, buyers using a conventional loan negotiated 2.2% off the original asking price and cash buyers negotiated 4% off the original asking price
I hope the veterans and active duty military readers had a great Veterans Day Weekend. Thank you for your service!
If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.
Recent Stories
There’s an elevated fire danger in Northern Virginia and other parts of the D.C. region today and tomorrow. Dry, breezy conditions mean that brush fires can spread quickly. While the…
Governance Change Postmortem –With their dreams of swift legislative action in Richmond quashed, proponents of Arlington governance changes say they’re not backing down in an effort to achieve their goals….
Good Monday evening, Arlington. Let’s take a look back at today’s stories and a look forward to tomorrow’s event calendar. 🕗 News recap The following articles were published earlier today…
An 18-year-old Arlington woman is facing a litany of charges after an reported bike theft led to violence. The incident happened Sunday evening near the intersection of S. Walter Reed…
Well-Paid Maids recently unveiled a new scheduling system.
That means it’s easier than ever to book your professional home cleaning with the only certified living-wage home cleaning service in the D.C. area.
Here’s what to expect when you book your cleaning:
-
Select your location.
-
Choose your service (i.e. 1 BD/1BA). (This is also where you’ll see the rate.)
-
Pick your cleaner. (If you don’t have a preference, opt for “any available.”)
-
Schedule a date and time. You can also set up recurring cleanings and get a discount!
-
Enter your information and reserve.
Are you facing life’s challenges, feeling overwhelmed, or seeking personal growth? Embrace the path to emotional well-being with our expert psychotherapy services!
Why Choose Us?
Our team of compassionate and experienced psychotherapists is here to guide you on your journey to inner peace, self-discovery, and positive change. We provide a safe and supportive environment where you can explore your thoughts and feelings without judgment.
What We Offer:
✔️ Individual Therapy
✔️ Couples Counseling
✔️ Anxiety & Stress Management
✔️ Depression Treatment
✔️ Trauma Healing
✔️ Self-Esteem Building
✔️ Life Transitions Support
✔️ And Much More!
Portofino Italian Wine Dinner, April 6, 6:30pm
Four course Italian dinner, paired with 2 wines each. The wines will be served “blind” and notes on each wine will be discussed. The event is coordinated with Elite Wine Importers and The Portofino Restaurant. The dinner is on Saturday,
Live Comedy Showcase Starring Winston Hodges
Friday, April 19
8pm (Doors open at 7)
Crystal City Sports Pub – 3rd Floor Lounge
Arlington, VA