What is the upfront fee paid to the VA on a VA guaranteed loan called?

The upfront fee paid to the VA on a VA guaranteed loan is known as the Funding Fee. This fee is essential because it helps to maintain the program at no cost to taxpayers and allows veterans to access home financing with favorable terms. The Funding Fee can vary based on several factors, including whether the borrower has used a VA loan benefit before, the size of the down payment, and whether the borrower is on active duty or a veteran. It can be financed into the loan amount, which means that the borrower does not have to pay it out of pocket at the time of closing, making it more manageable for veterans seeking home loans.

The other terms presented do not apply in this context: Abandonment refers to relinquishing ownership of property, Abatement usually pertains to a reduction in tax or rent, and Usury refers to charging excessively high-interest rates on loans. Understanding the role of the Funding Fee in a VA loan is crucial for anyone navigating veteran home financing options.