VA issued Circular 26-21-26 to clarify the funding fee determination for borrowers purchasing or constructing a home with a 5% or 10% down payment. Per the Circular, the percentage down is calculated as a percentage of the total purchase price or construction cost of the dwelling (including cases where the purchase price exceeds the reasonable value, as established by VA). In addition, any amount paid by the borrower towards the purchase price (including any amount exceeding reasonable value) must be included in the percentage down calculation. The Circular applies only to purchase and construction loans where the borrower is not exempt from paying the statutory funding fee. The Circular is effective immediately.
Click to view the VA Circular 26-21-26: https://www.tenaco.com/wp-content/uploads/2021/12/VA-Circular-26-21-26-12-17-21.pdf
