Last updated: October 17, 2026
The VA funding fee is a one-time payment that applies to most VA-backed home loans. It helps offset the cost to U.S. taxpayers and reduces the expense of the program for Veterans. This fee can typically be paid at closing or financed into your loan amount. Understanding the specific funding fee calculation and when you might be exempt can help you plan your home financing effectively.
What is the VA Funding Fee?
A VA-backed home loan is a mortgage provided by a private lender, with a portion guaranteed by the U.S. Department of Veterans Affairs (VA). While these loans do not require a down payment for eligible borrowers with full entitlement and do not have monthly mortgage insurance (PMI), they do have a one-time funding fee. This fee is a percentage of your loan amount, and its purpose is to help ensure the home loan program remains viable for future generations of service members.
The specific percentage you pay depends on several factors, including your service history, the type of loan, and whether you've used your loan benefit before. For purchase and construction loans, the amount of your down payment can also affect the fee. You can find the current funding fee percentages on the VA's website at va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/.
Funding Fee Percentages for Purchase and Construction Loans
For most VA-backed purchase and construction loans, the funding fee depends on whether it's your first time using the benefit and how much of a down payment you make. If you are making a down payment, it can reduce the funding fee percentage.
- Less than 5% down payment:
- First time use: 2.15% of the loan amount.
- Subsequent use: 3.30% of the loan amount.
- 5% to 9.99% down payment:
- First or subsequent use: 1.50% of the loan amount.
- 10% or more down payment:
- First or subsequent use: 1.25% of the loan amount. (Source: U.S. Department of Veterans Affairs, VA funding fee and closing costs.)
Remember, these percentages are applied to the loan amount. For example, if you are using your loan benefit for the first time with less than 5% down on a $400,000 purchase, your funding fee would be $8,600 (2.15% of $400,000). You could pay this at closing or finance it, making your total loan amount $408,600. To explore different scenarios and understand your potential funding fee calculation, you can use a VA funding fee calculator to estimate your costs. (Source: U.S. Department of Veterans Affairs, VA funding fee and closing costs.)
Funding Fee Percentages for Refinance Loans
The funding fee for refinance loans is calculated differently than for purchase loans. For refinances, down payment tiers do not apply because there is no down payment. Down payment, rate, APR, and repayment terms (for example, a 30-year fixed-rate loan repaid in monthly installments) depend on your eligibility, credit, and the lender's approval.
- Cash-out refinance:
- First time use: flat 2.15% of the loan amount.
- Subsequent use: flat 3.30% of the loan amount. This applies regardless of the amount of equity you have in your home or the loan-to-value ratio. If you're considering using your home equity, a VA cash-out refinance can be a valuable tool.
- Interest Rate Reduction Refinance Loan (IRRRL):
- For most borrowers, the funding fee is 0.50% of the loan amount, every time. An IRRRL, also known as a Streamline Refinance, is designed to reduce your interest rate or convert an adjustable-rate mortgage to a fixed rate, and it is not a cash-out loan. Learn more about VA IRRRL benefits and what makes this option distinct. (Source: U.S. Department of Veterans Affairs, VA funding fee and closing costs.)
All funding fee percentages can be verified at va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/.
Who is Exempt from Paying the Funding Fee?
Some Veterans, service members, and qualifying surviving spouses are exempt from paying the funding fee entirely. If you are exempt, your funding fee will be $0. This can provide significant savings on your home loan.
You are generally exempt if: * You are a Veteran receiving VA compensation for a service-connected disability. * You are a Veteran who would be entitled to VA compensation for a service-connected disability if you did not receive retirement or active-duty pay. * You are a service member on active duty who has received a Purple Heart. * You are a surviving spouse of a Veteran who died in service or from a service-connected disability, and you are receiving Dependency and Indemnity Compensation (DIC).
Your Certificate of Eligibility (COE) will confirm your funding fee exemption status. If you believe you qualify for an exemption but it's not reflected on your COE, you may need to provide additional documentation to the VA. If you paid a funding fee but later received a rating that makes you exempt, you may be entitled to a refund. Further details on exemptions can be found on the VA's official website.
When Does a VA Loan Fit Your Needs?
A VA-backed home loan can be an excellent option for eligible borrowers looking to purchase or refinance a primary residence. This benefit includes the possibility of $0 down payment for those with full entitlement, competitive interest rates, and no monthly mortgage insurance. The VA also caps lender origination charges at 1% of the loan amount, helping to keep closing costs reasonable. (Source: VA funding fee and closing costs.) However, this type of loan requires that you intend to occupy the home as your primary residence, generally within 60 days of closing. (Source: VA funding fee and closing costs.) Investment properties and second homes are not eligible. Also, while the VA does not set a minimum credit score, individual lenders have their own requirements. We specialize in helping you understand these nuances and connect you with lenders who can meet your specific needs in Florida and Colorado. You can learn more about specific VA loan options for purchasing a home at our VA purchase loans page. (Source: VA funding fee and closing costs.)
What This Means for Your Estimate
A funding fee calculation estimate should be treated as planning information, not a loan approval or final offer. Your actual numbers depend on home price, entitlement, credit and income review, interest-rate assumptions, the funding fee (unless exempt), and full underwriting.
Eligibility Basics
For this loan, eligibility is established with a Certificate of Eligibility based on service history, the property must meet VA Minimum Property Requirements, and the borrower generally must occupy the home as a primary residence. Simply Approved Mortgages is a brokerage, NMLS #2620881, and is not a lender, the VA, or a government agency.
Costs, Obligations, and Safeguards
Borrowers remain responsible for the monthly mortgage payment, property taxes, homeowners insurance, HOA dues when applicable, and home maintenance. Review any tax questions with a qualified tax professional.
Get your VA Pre-Approval Summary.
Complete the short form and we send back a full VA breakdown: your entitlement, the VA funding fee, and an estimated $0-down monthly payment — with no mortgage insurance, ever.
- Your entitlement and county loan limit (if applicable)
- $0 down payment — no mortgage insurance, ever
- One-time VA funding fee, financeable into the loan
- Estimated monthly payment with taxes and insurance
Summary emailed and shown on screen · Not an approval or commitment to lend
Illustration only, generated from the information you enter. Not a Loan Estimate, pre-qualification, commitment to lend, or approval. Subject to appraisal, credit and income review, VA guidelines, and final lender approval. Not affiliated with, endorsed by, or sponsored by the U.S. Department of Veterans Affairs. Equal Housing Opportunity.
- Purchase price
- $385,000
- Down payment
- $0
- Base loan amount
- $385,000
- Financed funding fee (2.15%)
- $8,278
- Est. monthly payment
- $2,690
Sample figures · Simply Approved Mortgages · NMLS #2620881 · Equal Housing Opportunity
Related reading
- Understanding the VA Home Loan Funding Fee
- Who Is Exempt From the VA Funding Fee?
- VA Funding Fee For Refinance Loans And Cash-Out Options
- VA Funding Fee Changes And Updates: What To Know For 2026
- Recouping or Disputing a VA Funding Fee Payment
Figures in this example are illustrative for education only. They are not an offer of credit, not a quote, and no rate, APR, payment, or fee is being advertised. Actual terms depend on lender underwriting, your Certificate of Eligibility, and pricing available at the time of application.
Sources
These government publications are cited for VA-backed loan program background and general consumer education. Simply Approved Mortgages LLC (NMLS #2620881) is a mortgage broker and is not HUD, FHA, or the CFPB, and is not affiliated with or endorsed by any government agency.
VA home purchase calculator: run your own numbers
Edit the fields to see your down payment, financed one-time VA funding fee, and full monthly payment. VA loans allow $0 down and carry no monthly mortgage insurance.
Estimates only. Nothing here is an application, pre-qualification, pre-approval, rate quote, rate lock or commitment to lend. You can keep using this tool without giving us anything.
Estimates only — not a loan offer, rate lock, or commitment to lend. Taxes, insurance, and rates vary by county and credit profile.
Frequently asked questions
- 01What is the primary purpose of the VA funding fee?
The funding fee helps reduce the cost of the home loan program to U.S. taxpayers. It contributes to keeping the program available for Veterans, service members, and eligible surviving spouses, as outlined on benefits.va.gov.
- 02Can the VA funding fee be paid monthly?
No, the funding fee is a one-time charge. You can either pay it upfront at closing or finance it into your loan amount, increasing your overall mortgage balance.
- 03Does my credit score affect the VA funding fee calculation?
No, your credit score does not directly impact the funding fee percentage. The fee is determined by factors such as your service history, loan type, and down payment amount (for purchase loans). Individual lenders, however, do consider your credit score for loan approval.
- 04If I'm exempt from the funding fee, does my Certificate of Eligibility reflect this?
Yes, your Certificate of Eligibility (COE) will typically indicate whether you are exempt from the funding fee. If it doesn't, but you believe you qualify, you may need to provide additional documentation to the VA to update your status, as explained on VA.gov.
- 05Are there any situations where the funding fee for a cash-out refinance might be lower than 2.15% or 3.30%?
For cash-out refinances, the funding fee is a flat 2.15% for first-time use and 3.30% for subsequent use, unless you are exempt from the fee entirely. These percentages are constant regardless of your equity or loan-to-value ratio. (Source: U.S. Department of Veterans Affairs, VA funding fee and closing costs.)
- 06If I pay off my VA loan and get another one, does my funding fee always go up?
Not necessarily. While "subsequent use" often means a higher funding fee, for purchase loans, making a larger down payment (5% or more) can result in a lower funding fee percentage than your first use with a smaller down payment. For example, if your first loan had a 2.15% fee with less than 5% down, but your second has 5% or more down, the fee would be 1.50%. For a cash-out refinance, however, subsequent use will be 3.30% unless you are exempt. (Source: U.S. Department of Veterans Affairs, VA funding fee and closing costs.)
- 07How can I estimate my VA funding fee?
You can use the official percentages provided by the VA and the specific details of your loan to calculate an estimate. We also provide a funding fee calculator on our site where you can input your information to get an estimate. For a personalized pre-qualification, you can visit our pre-qualify page.
