What Is the VA Funding Fee and How Much Will You Pay?

The VA funding fee is a standard cost associated with VA loans. But how much you’ll pay depends how often you’ve used your VA loan benefit. And if you have a qualifying service-related disability, you may not have to pay the VA funding fee at all. 

Start your VA loan pre-approval here. 

What is the VA funding fee? 

The VA funding fee is a one-time fee that reduces the overall cost of VA loans to taxpayers. The VA loan is the only type of government-backed mortgage that does not require upfront and ongoing mortgage insurance. 

Both FHA and USDA loans have an initial mortgage insurance requirement as well as an annual mortgage insurance premium. VA loans only have an upfront funding fee charge. 

The lack of an ongoing mortgage insurance payment helps make VA loans affordable for veterans, active-duty service-members, and surviving spouses who are eligible for the VA loan benefit. But the funding fee helps offset the costs of administering and offering that benefit. 

Related reading: First-Time Homebuyer VA Loan: 100 Percent Financing for Your First Home 

How much is the VA funding fee? 

How much you’ll pay for the VA funding fee depends on two factors: whether this is your first VA loan and the amount of your down payment. 

Eligible VA borrowers who have full entitlement can take out a VA loan with 0% down.* But you can make a down payment if you choose. If you only have partial entitlement available, you may be required to make some down payment. 

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VA funding fee for first-time homebuyers

‍Down payment || Funding fee 

0-4.9% || 2.3% 

5-9.9% || 1.65%

10% or more || 1.4% 

VA funding fee for subsequent use

‍Down payment || Funding fee 

0-4.9% || 3.6% 

5-9.9% || 1.65% 

10% or more || 1.4% 

‍

The VA funding fee can be paid in full when you close on the home. You may also be able to roll the funding fee into your loan and pay it off as part of your mortgage payment. 

VA funding fees on other types of VA loans 

The VA funding fee applies not just to purchase loans but to other types of VA loans as well. 

If you do a cash-out refinance VA loan, the funding fee is 2.3% on your first use and 3.6% on subsequent uses. There is also a 0.5% funding fee on VA Interest Rate Reduction Refinancing Loans (IRRRL). 

Visit the VA website for details on other types of VA loan funding fees and closing costs. 

Do all VA borrowers have to pay the funding fee? 

No, not all VA borrowers need to pay the funding fee. You are exempt from paying the funding fee if the following apply to you. 

• You have a service-related disability for which you receive VA compensation. 
• You’re eligible to receive VA compensation for a service-related disability, even if you get active-duty pay or are retired instead. 
• You’re the surviving spouse of a veteran who died either in service or as the result of a service-connected disability, or who was totally disabled, and you're receiving Dependency and Indemnity Compensation (DIC). 
• You’re a service member who has a proposed or memorandum rating before the loan closing date, indicating you're eligible for compensation because of a pre-discharge claim. 
• You’re on active duty and received the Purple Heart. 

Note that if you get VA compensation for a disability related to your service after your VA home loan closes, you may be eligible for a refund of the funding fee. 

Related reading: VA Loans Help Veterans With Disabilities Claim the American Dream 

The bottom line on the VA funding fee 

The VA funding fee helps support the VA loan program. But if it presents a hurdle to otherwise eligible VA borrowers, there are ways to help offset the cost so they can still purchase a home. 

Connect with a VA lender here. 

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*A down payment is required if the borrower does not have full VA entitlement or when the loan amount exceeds the VA county limits. VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits. 

Fairway is not a registered or licensed credit repair organization. The information in this advertisement does not constitute financial planning advice. Please consult a financial planner regarding your specific situation. 

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