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VA Funding Fee – Everything You Need To Know

What is it?

VA funding fee is a charge imposed by the VA. All veterans using the VA loan program must pay a funding fee, except for those listed below.

You don’t have to pay the funding fee if you:

  • receive VA disability
  • are a surviving spouse of a vet who died in service or from a disability that was connected to the service.
  •  Are a Purple Heart recipient.

Why do I have to pay a funding fee?

Since the VA loan is a $0 money down loan with no mortgage insurance, the funding fee helps fund the program so vets can continue to use it. The fee also helps reduce the cost to taxpayers.

How do I pay for it and when?

You have three options to pay the fee:

  • Roll it into your loan and pay it off over time. With this option you are basically financing it.
  • Pay a portion at closing and roll the remaining portion into the loan
  • Pay the whole thing at closing. 

The funding fee is paid only once during the lifetime of the loan and is collected at the closing of the loan if not being financed.

When purchasing another property with a VA loan, the fee would be charged again.

Is there a funding fee when refinancing? 

Yes. When doing an IRRRL refinance the fee is only 0.5% When doing a cash out the funding fee increases to 3.6%. You can check out the funding fee chart below for the percentages.

Exemption of funding fee

An exemption to the funding fee exists for veterans who live with a service-related disability. To receive the exemption the borrower must either have a disability rating of 10% or be the recipient of disability payments from the VA.

Can I roll the funding fee into my loan?

Yes. The funding fee can be rolled into your loan whether you are purchasing or refinancing. This is the only fee that can be rolled in when purchasing a home. 

All other closing costs must be paid at closing.

Do I have to pay a funding fee every time I use the VA loan?

Yes, you have to pay it every time unless you are exempt.  The amount you get charged will depend on the loan type. For example, if you are doing a purchase the charge would be 3.6% for subsequent use and for a rate and term refinance the charge is only .5%.

If you are using the VA loan for the first time the charge is only 2.3%

Can the VA funding fee be waived?

No. All veterans using the program must pay the fee unless you are exempt.

If you receive VA disability you most likely are exempt.

How much is the VA funding fee?

The fee changes depending on what the loan type is. If it’s your first time using the loan than it is 2.3%. If it’s your second, third, fourth time using it than it is 3.6%.

If you are doing a VA cash out then it is 2.3% if it is your first time, and 3.6% for second, third, fourth time use of the program.

If you are doing a rate and term refinance called an IRRRL than it is .5%

Disabled veterans are exempt.

VA funding fee chart:

If you are purchasing a home

First Time Use

2.3%

For those who are using the VA loan for the first time

Second Time Use

3.6%

For those who have used the VA benefit before

If you are making a down payment

5% or more

1.65%

5% down payment decreases the funding fee charged whether its your first time or subsequent.

10% or more

1.4%

10% down payment decreases the charge even further whether it’s your first time or subsequent

If you are refinancing

Rate and Term Refinance (IRRRL)

.5%

For those who are refinancing but are only reducing the interest rate or changing the term of the loan

Cash-out Refinance

2.3% for first time

3.6% for subsequent use

For those who are refinancing and are taking cash out

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