Last updated: October 17, 2026
The VA home loan funding fee is a one-time fee paid to the U.S. Department of Veterans Affairs on most VA-backed purchase and refinance loans. This fee helps to lower the cost of the loan program for U.S. taxpayers, as the home loan benefit does not require a down payment or monthly mortgage insurance. For most borrowers, the fee can be paid in cash at closing or financed into the total loan amount.
The home loan benefit you've earned is a powerful tool for buying, refinancing, or renovating a home. Understanding how the funding fee works is a key step in using your benefit wisely. As a mortgage brokerage, Simply Approved Mortgages can help you navigate the details and see how they apply to your specific situation.
How the VA Home Loan Funding Fee Works
The funding fee is calculated as a percentage of your total loan amount. The specific percentage depends on your loan type (purchase or refinance), your down payment amount (for purchases only), and whether this is your first time using your home loan entitlement.
You have two options for paying this fee. You can pay it out of pocket at your loan closing along with other closing costs. Alternatively, you can finance it by adding it to your loan balance. While financing the fee is a common choice that preserves your cash on hand, it does increase the total amount you borrow and the total interest you'll pay over the life of the loan.
Your lender will calculate the exact fee amount and show you how financing it impacts your monthly payment and total costs. This allows you to make an informed decision based on your financial goals.
Calculating the Funding Fee for a Home Purchase
For home purchase loans, the funding fee percentage is based on how much of a down payment you make and whether you've used your home loan benefit before.
According to the U.S. Department of Veterans Affairs, the funding fee rates for purchase loans are as follows. These fees can be paid at closing or financed into the loan: * Less than 5% down: 2.15% for your first use, and 3.30% for any subsequent use. * 5% to 9.99% down: 1.50% for both first-time and subsequent use. * 10% or more down: 1.25% for both first-time and subsequent use. (Source: VA funding fee and closing costs.)
For example, if you are a first-time user buying a home with $0 down, your funding fee would be 2.15% of the loan amount. If you have used the benefit before, the fee for a similar loan would be 3.30%. You can explore different scenarios with a VA loan calculator to see how a down payment can reduce the fee. (Source: U.S. Department of Veterans Affairs, VA funding fee and closing costs.)
Calculating the Funding Fee for a Refinance
The funding fee calculation for a refinance is simpler because it does not depend on a down payment. The rate is determined only by the type of refinance loan and whether it's your first time using the benefit.
- [VA Cash-Out Refinance](/loans/cash-out-refinance): The funding fee is 2.15% if it's your first time using your benefit, and 3.30% for subsequent uses. This fee applies regardless of your home's equity. This type of loan allows you to tap into your home's equity for things like home improvements or debt consolidation.
- VA Interest Rate Reduction Refinance Loan (IRRRL): This loan, also known as a streamline refinance, has a funding fee of 0.50% for all borrowers who are not exempt. The goal of an IRRRL is to lower your interest rate or convert from an adjustable-rate to a fixed-rate mortgage. You can learn more about VA IRRRLs on our site. (Source: U.S. Department of Veterans Affairs, VA funding fee and closing costs.)
All funding fee percentages are set by the U.S. Department of Veterans Affairs and can be found on their website. As with a purchase, you can pay the fee at closing or finance it into the new loan.
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
Who is Exempt from Paying the VA Home Loan Funding Fee?
Not every veteran or service member has to pay the funding fee. You are exempt if you meet certain criteria established by the VA. This exemption is a significant financial advantage that can save you thousands of dollars on your loan.
You are exempt from the funding fee if you are a: * Veteran receiving VA compensation for a service-connected disability. * Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay. * Surviving spouse of a veteran who died in service or from a service-connected disability. * Service member who has received a Purple Heart.
An exemption from the funding fee may be available if you are receiving or entitled to VA compensation for a service-connected disability. The Certificate of Eligibility (COE) confirms this exemption. If a disability rating is granted after closing, it may lead to a refund of the funding fee from the VA.
How Your Certificate of Eligibility Confirms Your Funding Fee Status
Your eligibility for the home loan benefit and your funding fee status are officially documented on your Certificate of Eligibility (COE). This is a formal document issued by the U.S. Department of Veterans Affairs that lenders use to verify your entitlement.
The COE will clearly state whether you are "Exempt" or "Not Exempt" from the funding fee. If it says "Exempt," you will not have to pay the fee. If it says "Not Exempt," your lender will calculate the fee based on your loan details.
We can typically help you obtain your COE directly from the VA's system in just a few minutes. You can also get it yourself through the VA.gov portal. Having this document early in the process helps you and your lender understand the full cost of your loan. You can learn more about VA loan requirements and obtaining your COE.
The Funding Fee vs. Other Loan Costs
It’s helpful to compare the one-time funding fee to the ongoing costs associated with other loan types, like conventional or FHA loans.
Conventional loans often require private mortgage insurance (PMI) if your down payment is less than 20%. FHA loans require an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP) paid in monthly installments, usually for the life of the loan.
The VA-backed loan program has no monthly mortgage insurance. The funding fee is a single, one-time charge. Over the years, this can lead to substantial savings compared to the recurring monthly cost of PMI or FHA MIP. This structure is one of the most powerful financial advantages of the home loan benefit. The funding fee is just one part of the total closing costs on this type of loan, all of which will be detailed on your loan estimate.
What Happens If My Disability Rating Changes?
Timing is important when it comes to the funding fee exemption. If you have a disability claim pending with the VA when you close on your home loan, you will likely have to pay the funding fee upfront.
However, if your claim is later approved and the effective date of your disability rating is retroactive to a date before your loan closing, you can apply to the VA for a refund of the funding fee you paid. The process involves submitting an application to your VA Contact the VA directly for information on a funding fee refund. with documentation of your loan closing and disability award.
This refund process allows you to apply for a refund of the funding fee if the VA determines you are eligible for an exemption after closing.
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.
Related VA Home Loan Resources
Related VA Home Loan Resources
- VA home loan costs and fees
- funding fee
- Loan limits (applicable only with reduced or partial entitlement)
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.
Frequently asked questions
- 01Can I finance the VA home loan funding fee?
Yes, in most cases you can finance the funding fee by rolling it into your total loan amount. This increases your loan balance and the amount of interest you pay over time, but it reduces the amount of cash you need to bring to closing.
- 02Is the VA home loan funding fee refundable?
The fee is generally not refundable. The primary exception is if you pay the fee at closing but are later awarded VA disability benefits with an effective date that is prior to your loan's closing date. In that specific case, you can apply to the VA for a refund.
- 03Do I have to pay the funding fee on a VA IRRRL?
Yes, a VA Interest Rate Reduction Refinance Loan (IRRRL) has a funding fee of 0.50% for all borrowers unless you have a documented exemption. According to the VA, this fee can be paid in cash or financed into the loan. (Source: U.S. Department of Veterans Affairs, VA funding fee and closing costs.)
- 04What is a "subsequent use" funding fee?
A subsequent use fee is a higher funding fee percentage charged to borrowers who have used their VA home loan benefit before. For example, on a purchase with less than 5% down, the first-use fee is 2.15%, while the subsequent-use fee is 3.30%. (Source: U.S. Department of Veterans Affairs, VA funding fee and closing costs.)
- 05How do I prove I'm exempt from the VA home loan funding fee?
Your Certificate of Eligibility (COE), a document issued by the U.S. Department of Veterans Affairs, is the official proof. It will clearly state "Exempt" if you do not have to pay the fee. Your lender can help you get your COE.
- 06Does the funding fee change based on my credit score?
No, the funding fee percentage is not affected by your credit score. It is determined by the VA based on your loan type, your down payment amount for purchase loans, and whether it is your first or a subsequent use of the benefit.
- 07If my co-borrower is a non-veteran, does that change the funding fee?
No. If you are using your VA entitlement to get the loan, the funding fee is calculated based on your eligibility and usage history, regardless of whether your co-borrower is a civilian spouse or another non-veteran. The fee remains the same.
- 08Do National Guard or Reserve members pay a different funding fee?
No, the funding fee percentages are the same for all branches of service, including the National Guard and Reserves. The fee is based on the loan type, down payment, and prior use, not your service branch.
