The VA loan program is one of the most powerful benefits available to veterans and active-duty service members. It allows you to buy a home with no down payment, no monthly mortgage insurance, and competitive interest rates. But there’s one cost that often raises questions: the VA funding fee.
This article will explain:
- What the VA funding fee is and why it exists
- How much it costs based on your situation
- Who’s exempt from paying it
- How to pay the fee
- Refund eligibility and special scenarios
What Is the VA Funding Fee?
The VA funding fee is a one-time fee that helps cover the cost of the VA home loan program. It allows the Department of Veterans Affairs to continue offering low-cost financing without requiring monthly mortgage insurance (PMI or MIP).
Rather than charging this fee monthly, like other government-backed loans, the VA rolls it into the loan or allows you to pay it upfront at closing.
How Much Is the VA Funding Fee?
The fee amount depends on:
- Whether this is your first use of the VA loan or a subsequent use
- The size of your down payment
- The type of VA loan you’re using (purchase, refinance, IRRRL)
- Whether you’re using restored entitlement
Funding Fee Chart (2024 Guidelines)
| Loan Use | Down Payment | First-Time Use | Subsequent Use |
|---|---|---|---|
| Purchase / Construction | None | 2.15% | 3.30% |
| Purchase | 5% – 9.99% | 1.50% | 1.50% |
| Purchase | 10% or more | 1.25% | 1.25% |
| Cash-Out Refinance | Any | 2.15% | 3.30% |
| IRRRL (Streamline Refi) | N/A | 0.50% | 0.50% |
Note: These percentages apply to the loan amount, not the home price.
Related: How to Use Your VA Loan Multiple Times: Rules and Benefits Explained
VA Funding Fee Example
Let’s say you’re buying a $300,000 home using a VA loan with no down payment and it’s your first time using the benefit:
- Loan Amount: $300,000
- Funding Fee (2.15%): $6,450
- New Loan Total (if rolled in): $306,450
Want to run the numbers yourself? Try our VA Mortgage Calculator to estimate your total loan amount, monthly payment, and funding fee based on your personal situation.
Who Is Exempt from the VA Funding Fee?
You do not have to pay the VA funding fee if any of the following apply:
- You receive VA disability compensation
- You’re eligible for compensation but receive retirement or active duty pay instead
- You’re a surviving spouse of a veteran who died in service or from a service-connected disability
- You have a proposed or memorandum rating decision before closing
- You are a Purple Heart recipient currently serving on active duty
If you believe you qualify for an exemption but don’t have your Certificate of Eligibility yet, your lender can help verify it with the VA.
VA Disability Income Makes Loans Even Stronger
One of the best benefits of using VA disability income is that it can be grossed up by 25% for qualification purposes. That means if your disability pay is $1,000/month, lenders can count $1,250 toward your income — increasing how much you can qualify for without increasing your actual expenses.
Plus, disability income is non-taxable and generally considered stable — a huge asset when applying for a mortgage.
Want more details on the VA loan program? Check out our VA Mortgage Guide to understand all the benefits available to veterans and service members.
How Do You Pay the VA Funding Fee?
There are two options:
- Finance It Into the Loan – This is the most common method. The fee is rolled into your total loan balance, slightly increasing your monthly payments.
- Pay It Upfront – You can pay the funding fee out of pocket at closing, just like you would other closing costs.
If you’re using a seller credit, you can often apply part of it toward covering the funding fee.
Can You Get the Funding Fee Refunded?
Yes — if you paid the funding fee but later receive a VA disability rating that would have exempted you, you may be eligible for a full refund.
To qualify:
- Your VA rating must be effective before the loan closing date
- You must file for the refund with your lender or through the VA directly
Refunds are issued either as a check or credited back to your loan servicer.
What About Refinancing?
If you refinance an existing VA loan through an IRRRL (Interest Rate Reduction Refinance Loan), the funding fee is only 0.50% — and it can also be rolled into the new loan.
This is one of the lowest-cost refinance options available in the market, especially since it requires no appraisal or income verification in most cases.
FAQs: VA Funding Fee
What is the VA funding fee?
It’s a one-time fee charged by the VA to support the loan program and reduce taxpayer risk. It’s required on all VA loans unless you qualify for an exemption.
How much is the VA funding fee?
It ranges from 0.50% to 3.30% of the loan amount depending on your loan type, usage, and down payment.
Can the VA funding fee be waived?
Yes, if you receive VA disability compensation, are a surviving spouse, or meet certain military conditions.
Do I pay the VA funding fee more than once?
You’ll pay it again for each new VA loan, unless you qualify for an exemption. Lower fees apply with a down payment or for an IRRRL.
Is the VA funding fee refundable?
Yes — if you paid it but had a disability rating effective before closing, you may be eligible for a full refund.
Final Thoughts
The VA funding fee is a small cost compared to the huge financial benefits of the VA loan program — including no down payment, no PMI, and competitive rates. Most borrowers finance the fee into the loan, but understanding how it works helps you plan better and avoid surprises at closing.
If you want to understand how the fee affects your payment, run the numbers with our VA Mortgage Calculator. And if you’re considering using your VA loan again, read our guide on reusing VA loan benefits.
