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Report  | July 2019

The Negative Impacts of Raising the VA Home Loan Funding Fee

By Nam D. Pham, Ph.D. and Mary Donovan

The Department of Veterans Affairs (VA) home loan program has helped millions of veterans and their families obtain mortgage loans to purchase homes or refinance their mortgages with lower interest rates and/or cash out. The program was designed to help veterans who might struggle to build the kind of credit and asset profile necessary to qualify for conventional mortgage loans. This report quantifies the positive economic benefits of the VA Home Loan Guaranty program on veterans, their families, and the U.S. economy. An increase in VA funding fees would have significant negative impacts on VA loan originations and other economic activities sparked by home purchases. Under the current environment of rising interest rates, an increase in the VA funding fee schedule would have severe negative impacts on veterans, their families, and the U.S. economy.