type of eligible service, any down payment amount, and other factors. Overall, the funding fee can end up costing you double the price of traditional closing costs. You can pay the funding fee upfront in cash, like you would with closing costs, or you can roll it into the loan, meaning you would actually be financing more than 100% of the purchase price of your home and you would be paying interest on that fee. Some veterans may qualify for a funding fee waiver. Veterans who received a Purple Heart or who receive VA disability compensation, and surviving spouses of veterans who died in service or of a service-connected disability and who have not remarried are all eligible for funding fee waivers. The VA also allows for origination fees of up to 1%, and some lenders may charge an additional 1% or more in discount points — points you pay to get a lower interest rate — on top of that. But both fees are optional and won’t be charged by every lender, so be sure to shop around for the lowest interest rate and best terms. Also keep in mind, if you live in a state with community property laws, having a spouse with less-than-perfect credit or who owes alimony, child support, or other financial obligations can make getting approved for a VA loan more challenging. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are all such states. A VA loan can only be used to buy a primary residence, since the purpose of VA financing is to help veterans and service members buy and live in their own homes. But that home can be a multi- family unit (up to four) if the veteran plans to live in one of the units. That can be a boon to veterans who want to earn income from their property to help them build equity and pay off their mortgage. But being a landlord comes with risks as well, so be sure you can afford your mortgage if you can’t rent all your units.
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