cheapest option. VA loans have upfront funding fees that can run from 2.3% to 3.6% of the home's purchase price. The funding fee will depend on your loan amount, type of eligible service, any down payment amount, and other factors. The funding fee can cost you double that of traditional closing costs. You can pay the funding fee upfront in cash as you would with closing costs, or you can roll it into the loan. In this case, 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 received VA disability compensation, and surviving spouses of veterans who died in service or who had a service-connected disability and 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 shop for the lowest interest rate and best terms. Also, keep in mind that 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 VA financing aims to help veterans and service members buy and live in their homes. However, 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
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