The VA funding fee is a one-time charge that helps sustain the VA loan program. First-time users with $0 down pay 2.15% of the loan amount. Veterans with service-connected disabilities, Purple Heart recipients on active duty, and surviving spouses are fully exempt from the fee.
What Is the VA Funding Fee?
The VA funding fee is a one-time payment made to the U.S. Department of Veterans Affairs at closing. Unlike PMI on conventional loans, the funding fee is not an ongoing monthly charge — it is paid once and helps keep the VA loan program running without taxpayer funding.
The VA loan program does not require a down payment or private mortgage insurance. The funding fee is essentially how the VA offsets the risk of guaranteeing loans with such favorable terms. Think of it as the trade-off for $0 down financing and no monthly PMI.
What Are the Current VA Funding Fee Rates?
The funding fee varies based on three factors: whether it is your first or subsequent use, your down payment amount, and your service category (Regular Military vs. Guard/Reserve).
Purchase and Construction Loans
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| $0 down (less than 5%) | 2.15% | 3.3% |
| 5% to 9.99% down | 1.5% | 1.5% |
| 10% or more down | 1.25% | 1.25% |
Refinance Loans
| Refinance Type | Funding Fee |
|---|---|
| Interest Rate Reduction Refinance Loan (IRRRL) | 0.5% |
| Cash-Out Refinance — First Use | 2.15% |
| Cash-Out Refinance — Subsequent Use | 3.3% |
National Guard and Reserve members pay the same rates as Regular Military for purchases. Previously, Guard and Reserve rates were slightly higher, but the rates were equalized in recent years.
How Much Is the Funding Fee in Dollars?
Here is what the funding fee looks like in real dollars on a few common loan amounts for first-time use with $0 down (2.15%):
| Loan Amount | Funding Fee (2.15%) |
|---|---|
| $300,000 | $6,450 |
| $400,000 | $8,600 |
| $500,000 | $10,750 |
| $600,000 | $12,900 |
While these numbers look significant, remember that you are avoiding both a down payment (which could be $60,000-$120,000 on the same homes with a conventional loan) and monthly PMI. The math almost always favors the VA loan, especially when you finance the funding fee into the loan. Use our VA funding fee calculator to see your exact fee →
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Who Is Exempt from the VA Funding Fee?
The following groups are completely exempt from paying the VA funding fee:
- Veterans receiving VA disability compensation for a service-connected disability.
- Veterans rated eligible to receive VA compensation but who are receiving retirement or active-duty pay instead.
- Active-duty Purple Heart recipients. This exemption was added by the Purple Heart and Disabled Veterans Equal Access Act.
- Surviving spouses who are eligible for VA home loan benefits.
If you have a pending disability claim at the time of closing, you will typically pay the funding fee upfront. If the VA later grants your claim with an effective date before closing, you can apply for a refund of the funding fee. This is worth tracking if you have an active claim.
How Do You Pay the VA Funding Fee?
You have three options for paying the funding fee:
- Finance it into the loan: The most common approach. The funding fee is added to your loan balance, so you pay no cash upfront. You pay interest on the fee over the life of the loan.
- Pay it at closing: You can pay the full fee as a closing cost. This keeps your loan balance lower and saves interest over time.
- Seller-paid: The seller can pay your funding fee as part of seller concessions. VA loans allow the seller to pay up to 4% of the purchase price in concessions (in addition to normal closing costs and discount points).
Does a Down Payment Reduce the Funding Fee?
Yes, and significantly. Putting 5% down drops the first-use fee from 2.15% to 1.5%. Putting 10% or more down drops it to 1.25%. And importantly, at the 5% and 10% tiers, the fee is the same whether it is your first use or subsequent use. So if you are using your VA benefit for the second time and can put down 5%, you pay 1.5% instead of 3.3%. That is a major savings. Learn about the full $0 down benefit and when it makes sense to put money down anyway.
I'm Barrett Henry — a Military Relocation Professional (MRP) and Broker Associate with REMAX Collective. As the son of a U.S. Air Force veteran, I help military homebuyers understand every cost involved in a VA purchase — including the funding fee — so there are no surprises at closing. For the latest official fee schedule, visit the U.S. Department of Veterans Affairs. Learn more about VA loan eligibility or see how VA loans compare to conventional mortgages.
VA Funding Fee Schedule at a Glance
This table summarizes every VA funding fee rate in one place — purchases, IRRRLs, and cash-out refinances:
| Type | First Use | Subsequent Use |
|---|---|---|
| Purchase, 0% down | 2.15% | 3.3% |
| Purchase, 5–9.99% down | 1.5% | 1.5% |
| Purchase, 10%+ down | 1.25% | 1.25% |
| IRRRL (Streamline Refi) | 0.5% | 0.5% |
| Cash-Out Refinance | 2.15% | 3.3% |
Sources
- U.S. Department of Veterans Affairs — VA Home Loans
- According to the U.S. Department of Veterans Affairs (VA Pamphlet 26-7, Chapter 8), these funding fee rates are effective as of 2026. Veterans with service-connected disabilities are exempt from the funding fee.
- Purple Heart and Disabled Veterans Equal Access Act of 2018 — expanded funding fee exemptions to active-duty Purple Heart recipients.
Barrett Henry, MRP
Broker Associate, REMAX Collective
23+ years of real estate experience helping Tampa Bay veterans navigate VA home loans.
Learn more about Barrett →Related VA Loan Guides
What can you afford with a VA loan?
VA loans allow $0 down with full entitlement
Tampa Bay avg: ~1.2% tax + ~0.8% insurance
Estimated Monthly Payment (PITI)
$2,796
Educational estimate only. 30-year fixed, no PMI (VA benefit). Does not include VA funding fee or HOA dues.
See full affordability calculator →Ready to get started?
What's your goal?
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Frequently Asked Questions
What is the VA funding fee for first-time users?
For first-time VA loan users putting $0 down, the funding fee is 2.15% of the loan amount. If you put down 5% or more, the fee drops to 1.5%. With 10% or more down, it drops to 1.25%.
Who is exempt from the VA funding fee?
Veterans receiving VA disability compensation, veterans rated eligible for compensation but receiving retirement pay, Purple Heart recipients on active duty, and surviving spouses eligible for VA loan benefits are all exempt from the funding fee.
Can the VA funding fee be rolled into the loan?
Yes. Most borrowers choose to finance the funding fee by adding it to the loan balance rather than paying it upfront at closing. This means you don't need cash for the fee, but you will pay interest on it over the life of the loan.
Is the VA funding fee higher for subsequent use?
Yes. For subsequent use (second or later VA loan) with $0 down, the funding fee increases to 3.3%. With 5% or more down it's 1.5%, and with 10% or more down it's 1.25% — the same as first-time use at those down payment levels.
Can I get a refund on the VA funding fee if I later receive a disability rating?
Yes. If you are later granted a service-connected disability rating with an effective date before closing, you may be entitled to a refund of the funding fee. Contact the VA directly to initiate the refund process.