g. How to Use the Funding Fee Tables

The lender must find the appropriate percentage in the tables using the following parameters:

·   Is the veteran eligible for VA loan benefits through service in the regular military or the Reserves/National Guard?  Examine the Certificate of Eligibility (COE).  For Reserves/National Guard, the COE bears the notation, “RESERVES/NATIONAL GUARD - INCREASED FUNDING FEE,” and is buff-colored rather than green.

·   Is the veteran a subsequent user of VA home loan benefits or obtaining his or her first VA loan?  Examine the COE.  An entitlement code of “5” indicates subsequent use, as does a loan number entered in the “Loan Number” column.

·   What type of loan is the veteran obtaining?  The funding fee varies depending upon whether the loan is a purchase or construction loan, an IRRRL, or a cash-out refinancing loan.

·   Is the veteran making a downpayment of at least 5 or 10%?

-   Calculate what percentage of the sales price of the property the veteran is remitting as a downpayment.

-   The down payment may come from the veteran’s own resources or borrowed funds.  Except, if the purchase price exceeds the reasonable value of the property, the difference between the purchase price and the reasonable value must be paid by the veteran in cash without borrowing.

·   For construction loans only, equity in the secured property counts as a downpayment for calculating the funding fee.