The VA funding fee, explained
A one-time fee on most VA loans. Here is how much it is, who does not pay it, and how it works in a real loan.
Good news: many veterans are exempt
If you receive VA compensation for a service-connected disability, you do not pay the funding fee. The same goes for Purple Heart recipients on active duty and certain surviving spouses. The full list is below, and your Certificate of Eligibility shows your status.
What the funding fee is
The VA funding fee is a one-time charge paid to the Department of Veterans Affairs when you close a VA purchase or refinance loan. It helps keep the program running without monthly mortgage insurance. Most borrowers choose to add it to the loan amount instead of paying it at closing.
Purchase loan rates
The fee depends on whether this is your first VA loan and how much you put down.
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% to under 10% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
Rates shown are the current VA schedule, which VA lists as in effect through November 2031. Confirm on VA.gov before you rely on them.
Refinance rates
| Loan type | Fee |
|---|---|
| Streamline refinance (IRRRL) | 0.5% |
| Cash-out refinance, first use | 2.15% |
| Cash-out refinance, subsequent use | 3.3% |
The streamline fee is much lower than the others. See the VA streamline refinance guide.
Who does not pay the fee
- Veterans receiving VA compensation for a service-connected disability
- Veterans who would receive compensation if they were not receiving retirement or active duty pay
- Surviving spouses of veterans who died in service or from a service-connected disability, receiving Dependency and Indemnity Compensation
- Service members with a proposed or memorandum rating showing they will be eligible for compensation, in some cases
- Purple Heart recipients on active duty at closing
Your Certificate of Eligibility shows whether you are exempt. If you have a pending disability claim, tell me early, because a fee paid at closing may be refunded if VA later approves it.
A simple example
On a $300,000 base loan for a first-time VA borrower with a down payment under 5%, a 2.15% fee is $6,450. If you finance it, your loan amount becomes $306,450. This is an illustration only. Your numbers depend on the price, your down payment and your exemption status.
Funding fee questions
Can I roll the funding fee into the loan?
Yes. Most VA borrowers finance it. The financed amount adds to your loan balance and monthly payment.
Do I pay the fee every time I use my VA loan benefit?
Yes, on each new VA loan unless you are exempt. The higher subsequent-use rate applies when you put less than 5% down.
Is the fee the same as mortgage insurance?
No. VA loans have no monthly mortgage insurance. The funding fee is a one-time charge.
Can the seller pay it?
Sometimes. It can be negotiated as part of the purchase contract within VA limits. Ask me how that works on your deal.
Next steps
Want the fee worked out on a specific price? Call and I will run it with you.
Questions about your VA loan?
Call or text me and I will review your options.
VA Loans Kansas City · Steven Clune, Loan Officer, NMLS #2798604 · Nexa Lending, NMLS #1660690 · Rochon Mortgage Team, 1475 Walnut St, Kansas City, MO 64106 · 913.530.8133
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