VA Funding Fee:
Every Rate, Exemption & Scenario
The VA funding fee replaces monthly mortgage insurance with a one-time charge. The amount depends on your loan type, down payment, and whether this is your first or subsequent use. Many veterans pay nothing at all.
The Basics
What Is the VA Funding Fee?
The VA funding fee is a one-time charge paid at closing on every VA-guaranteed loan. It serves as the program's self-funding mechanism, instead of charging monthly mortgage insurance like FHA or conventional loans, the VA collects this single payment to sustain the guaranty program for future generations of veterans.
The fee amount varies based on several factors: the type of loan (purchase, IRRRL, or cash-out refinance), your down payment percentage, whether this is your first or subsequent use of the benefit, and whether you are a regular military or Reserves/Guard member. Importantly, many veterans and surviving spouses are completely exempt from paying it.
Purchase Loans
VA Purchase Funding Fee Table
The tables below show every funding fee percentage for VA purchase loans based on down payment and use count. Putting more money down reduces the fee, and first-time users always pay less than those using the benefit again. These rates apply equally to regular military and Reserves/Guard members as of the current fee schedule.
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% to 9.99% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
Dollar example on a $300,000 purchase
First-time use with zero down: $300,000 × 2.15% = $6,450. With 5% down ($15,000): $285,000 × 1.5% = $4,275. That 5% down payment saves $2,175 on the funding fee alone, plus reduces your loan balance and monthly payment. See the full VA purchase walkthrough
Refinance Loans
VA Refinance Funding Fee Table
Refinance funding fees differ significantly from purchase fees. The VA IRRRL (streamline refinance) carries the lowest funding fee in the entire VA program, just 0.5% regardless of use count. Cash-out refinances carry higher fees because they convert equity to cash, increasing the VA's risk exposure.
| Refinance Type | First Use | Subsequent Use |
|---|---|---|
| IRRRL (Streamline Refinance) | 0.5% | 0.5% |
| Cash-Out Refinance | 2.15% | 3.3% |
The IRRRL's low fee is one of many reasons it's the preferred refinance path for veterans who already have a VA loan. No appraisal, no income verification, and a 0.5% funding fee make it exceptionally efficient. The catch: you must already have a VA loan to use the IRRRL program.
Want To Know What This Looks Like On Your Numbers?
Every scenario is different. A soft credit check tells you where you actually stand, and nothing hits your report until you decide to move forward.
Exemptions
Who Is Exempt from the Funding Fee?
Several categories of borrowers pay zero funding fee. These exemptions apply automatically when your Certificate of Eligibility reflects the qualifying status. If your exemption status changes after closing (for example, you receive a disability rating retroactively), you may be entitled to a refund of the fee already paid.
Fully Exempt Borrowers
- Veterans with VA-rated disability (any percentage)Even a 10% disability rating fully exempts you from the funding fee on all VA loan types.
- Veterans receiving VA disability compensationActive compensation payments confirm exempt status, reflected on your COE.
- Surviving spouses receiving DIC benefitsDependency and Indemnity Compensation recipients are fully exempt. Surviving spouse details
- Active duty Purple Heart recipientsService members who received a Purple Heart while on active duty are exempt, no disability rating required.
Pending Disability Claims
If you have a disability claim pending with the VA at the time of closing, you are required to pay the funding fee initially. However, if the VA subsequently grants your claim retroactively to a date before your loan closing, you become eligible for a full refund of the funding fee.
Mortgages by Channing tracks pending claims and can help you file for a refund if your rating is granted after closing. The VA processes these refunds directly.
This exemption saves thousands
On a $350,000 loan, the first-use funding fee would be $7,525. A veteran with any disability rating, even 10%, pays $0. If you suspect you may have a service-connected condition, consider filing your VA disability claim before purchasing. The savings are immediate and significant.
Payment Options
Financing the Funding Fee Into Your Loan
Most VA borrowers choose to finance the funding fee into their loan amount rather than paying it upfront in cash. This is explicitly allowed by VA guidelines and is the standard approach. The fee simply gets added to your base loan balance, spreading the cost across the life of the mortgage instead of requiring cash at closing.
How Financing Works
If your purchase price is $300,000 with zero down and a 2.15% funding fee ($6,450), your total loan amount becomes $306,450. Your monthly payment increases slightly, but you avoid a large cash outlay at closing.
On a 30-year loan at 6.5%, financing the $6,450 fee adds roughly $41 per month to your payment.
Pay Upfront or Finance?
- Finance if cash is limitedPreserves liquidity for moving expenses, furniture, and reserves after closing.
- Pay upfront if you want lower paymentsPaying cash eliminates the added principal and saves interest over the loan's life.
- Seller can pay the funding feeThe funding fee counts within the 4% seller concession limit. Negotiate it as part of your offer. VA purchase concessions explained
Refunds
Getting a Funding Fee Refund
If you paid the funding fee at closing and later receive a retroactive VA disability rating that covers the closing date, you are entitled to a full refund. The VA processes these refunds directly, you do not need to refinance or take any action with your lender beyond notifying them of the updated Certificate of Eligibility.
How the refund process works
Once your disability rating is granted with a retroactive effective date prior to your loan closing, contact your loan servicer with the updated COE. The servicer coordinates with the VA, and the refund is typically applied to your loan principal balance. In some cases, a cash refund is issued directly. Processing times vary but generally take 8 to 12 weeks after the claim is finalized.
Want To Know What This Looks Like On Your Numbers?
Every scenario is different. A soft credit check tells you where you actually stand, and nothing hits your report until you decide to move forward.
Common Questions
VA Funding Fee FAQ
Detailed answers about the VA funding fee, exemptions, and how it impacts your loan.
Get Your Exact Funding Fee Calculated
Mortgages by Channing will calculate your precise funding fee, or confirm your exemption, as part of your free pre-approval.
The Application
Apply From Your Phone In Fifteen Minutes
Most veterans put this off because they picture a folder of paperwork and a week of silence. The whole VA application runs on your phone, and it reaches me the minute you submit it.
- Starts with a soft credit check, so your score is never touched
- We pull your Certificate of Eligibility, you don't chase it down
- Upload documents with your phone camera, no scanner needed
- You hear back from Channing, not from a call center queue
If the numbers say wait, I'll tell you that too, and then we make a plan to fix whatever is in the way.
Complete Your Application
Five short steps. Most people finish in about fifteen minutes.
- Tell us what you're looking for
- We request your COE
- Upload your documents
Your pre-approval letter is ready. I sent it to your email and to your agent.
Got your application. I'm reviewing it now and will call you this afternoon.
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Real families we have helped get from pre-approval to keys in hand.
Find Out Where You
Actually Stand
A soft credit check tells you what you qualify for before anyone pulls hard credit. If the numbers say wait, I will tell you that too, and then we make a plan to fix whatever is in the way.
Check My VA EligibilityMortgages by Channing · 337-476-2623 · Licensed across Louisiana · NMLS #1457759
