Study: Upping the VA Home Loan Funding Fee is a Bad Move

A new study published by NDP Analytics has determined that increasing the funding fee on VA home loans could result in fewer servicemembers and veterans becoming homeowners.

 

The study noted that 76 percent of veterans are homeowners, compared to 62 percent of non-veterans. But it also forecasted problems if the first-use VA funding fee was increased by 100 basis points, or one percentage point, with the warning that it would restrict more than 100,000 first-time buyers from using their VA loan benefit. The study also predicted that a rising rate environment would exacerbate the problem, with as many as 365,000 veterans and military families priced out of using their home loan benefit if rates and fees keep rising.

 

“The VA Home Loan Program has helped millions of veterans and servicemembers secure mortgages to purchase their homes,” said Nam D. Pham, co-author of the study and managing partner at Washington, D.C.-based NDP Analytics. “Additionally, the residual economic impact of the program is far-reaching, supporting 361,862 jobs across all industries that earn $12.7 billion per year. VA purchase loans generate another $47.3 billion in economic activity and contribute $27.6 billion value-added to the U.S. GDP. Raising the VA funding fee will have a dramatic impact on these key drivers for the U.S. economy.”

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