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Does anyone know if the VA funding fee is deductible as mortgage points?

On the paperwork, the VA funding fee is sometimes also classified as "up front mortgage premium." PMI is not charged on a month-to-month basis on VA loans.

BF bought a house in February of 2011. Now he is refinancing to drop interest rate by .875% and save approx. $280-$300/month. But he had to pay 1.5 points at time of purchase, and now he has to pay .5 point as a refi VA funding fee.

Which, if any, of those 2.0 points can he deduct on his '11 taxes? Both? Only the 1.5 original purchase loan points, because the mortgage is being paid off with the refinance? Neither, because all the points are technically up front PMI payments?

I'd like for him to be able to have less money withheld from paychecks for the rest of the year if it turns out that a lot of points will be tax-deductible.

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