@prf44 wrote:
The VA funding fee is not fully deductible if your income exceeds $100,000 and if it exceeds 200,000 then the VA funding fee is not deductible.
Not entirely correct. The VA funding fee is considered a mortgage insurance premium. All mortgage insurance premiums are subject to an income phase-out. For 2020, the phase-out begins at an AGI of $100,000 ($50,000 if married filing separately) and ends at $109,000 ($54,500 if married filing separately). Above $109,000, no mortgage insurance premiums are deductible due to the income limitation.
And for 2021, mortgage insurance premiums are not deductible for anyone, unless Congress changes the tax law again.
Also, the question was not about the income limitation, but whether it could be deducted even though the borrower didn't pay the premium directly because it was rolled into the loan. For FHA MIP and for PMI (private mortgage insurance) the premium must be spread out over 84 months if it is not paid up front with cash, but the VA funding fee is fully deductible in the year of the mortgage even if it is rolled into the mortgage.
