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Can I Add the VA Funding Fee to a Jumbo Loan?

The Veteran’s Administration (VA) is responsible for insuring the home mortgages for qualified veterans who buy real estate. The veteran is required to pay a VA funding fee that can (if desired) be rolled into the total amount of the loan. In case the purchase price turns out to be more than the VA loan limit, the buyer is allowed by the administration to get a jumbo loan. Adding the funding fee to the jumbo loan amount however is not possible.

When it comes to the VA jumbo home loan, “jumbo” is used to describe any amount of the VA home loan that exceeds $417,000.

Must be paid in cash at closing

At the time of closing, it is required that the VA funding fee on the jumbo loan be paid in cash. The buyer or the seller is allowed to pay the funding fee but rolling it into the loan is not accepted. The seller can pay up to 4% of the value of the property in seller concessions towards the closing costs of the buyer. The seller cannot exceed the 4% limit of contribution if he/she pays the fee at closing.

When the maximum county limit is $417000

$417,000 is the limit for the VA loan in most areas. The VA funding fee can be entirely rolled into the loan if the loan is under the limit. In cases when the loan is over the limit then the funding fee has to be paid during closing. A VA loan for single residence should not be more than $1,000,000 as per the VA guidelines.

When the maximum county limit exceeds $417,000

High living costs in some areas have made for a VA loan limit that is over $417,000. If the price of purchasing the home is more than the area’s limit for the loan, the funding fee has to be paid at closing and in cash. If the loan amount exceeds the limit you still receive all additional benefits of a VA loan.

Other requirements

As a veteran, you don’t have or need to pay a down payment of a VA home loan on the initial $417,000. The buyer only needs to pay a 25% down payment on any amount that exceeds $417,000 or the excess of the local limit.

VA loans require that a veteran should have a minimum score of 640 in credit if they are to receive more than $650,000 as jumbo loan. Manufactured and mobile homes cannot obtain a VA jumbo loan as they do not qualify for the program. The buyer has to secure a fixed rate of interest in order to obtain a jumbo loan insured by the VA.

Summary

The VA Jumbo Loan designed such that it will be big enough to cover the cost and size of the home you have always wanted. In case, as a veteran, you feel like the cost of the home you need to refinance or purchase exceeds $417,000, the VA jumbo mortgage leaves you to pay only 25% of the amount (any amount) exceeding the $417,000 limit.

For instance, you’re a veteran and eligible for the VA loan program. You find out that your dream home will not go for less than $600,000. Since your VA home loan would be $417,000 with no down payment, you only pay 25% of $183,000 which equals to $45,750. This means that you are purchasing a home worth $600,000 for a down payment of just $45,750 plus the closing costs. This is much less than the standard 10% conventional mortgage payment making the VA loan much cheaper.