Understanding the VA Funding Fee

The VA funding fee is a one-time payment that helps keep the VA loan program running for future generations of service members — it's part of why VA loans require no mortgage insurance.

What it costs

The fee is a percentage of your loan amount, and it depends on:

• Whether it's your first use or a subsequent use of the benefit
• Your down payment amount (a larger down payment lowers the fee)
• Your loan type (purchase, refinance, etc.)

For most first-time purchase loans with no down payment, the fee is around 2.15% of the loan amount. Subsequent uses are higher unless you put money down.

You can roll it into the loan

You don't have to pay the funding fee in cash at closing. Most borrowers finance it into the loan, spreading the cost over the life of the mortgage.

Who is exempt

You may be exempt from the funding fee entirely if you:

• Receive VA compensation for a service-connected disability
• Are a surviving spouse of a veteran who died in service or from a service-connected disability
• Are a Purple Heart recipient serving on active duty

If you're exempt, make sure your lender knows — it can save you thousands.

Why it's still a good deal

Even with the funding fee, VA loans often cost less over time than conventional or FHA loans because they require no down payment and no monthly mortgage insurance.

This article is educational only. Your lender and the VA can confirm your exact fee and any exemption.