Get to Know What Funding Fee Means
When AB guarantees a home loan, the closing cost associated with it for originating the loan is called a funding fee. The funding fee will vary depending on the type of loan required to suit different factors such as whether you are using your entitlement for the first time, whether you are a disabled veteran, whether you had served on active duty with the National Guard or the Reserves; in addition to the down payment.
The 2 Tables given below would give more insight in to the composition of the funding fee charged by AB for different situations outlined above.
First time Use of Entitlement
To Purchase an Eligible Property |
Down Payment |
Active Duty |
NG/Reserves |
0% to 4.99% |
2.2% |
2.4% |
5% to 9.99% |
1.50% |
1.75% |
10% + |
1.25% |
1.5% |
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Second Time Use of Entitlement
To Purchase of an Eligible Property |
Down Payment |
Active Duty |
NG/Reserves |
0% to 4.99% |
3.3% |
3.3% |
5% to 9.99% |
1.50% |
1.75% |
10% + |
1.25% |
1.5% |
The higher fee charged in the case of second time users would not apply for the subsequent loan if the veteran’s only instance of prior use of his entitlement had been in respect of a constructed house
Funding Fee Chargeable For Other Loan Types
For Loan Assumptions: 0.50%
For Cash-out Refinance: 3.3% funding fee
For Streamline Refinance (IRRRL): 50% funding fee
For Constructed Home Loans: 1.00%
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