VA Funding Fee Rates
The VA funding fee is a one-time charge that replaces mortgage insurance on a VA loan. For a first-time VA buyer putting less than 5% down, it is 2.15% of the loan; it falls to 1.5% with 5% down and 1.25% with 10% down. Later uses cost more at the low-down-payment tier.
The fee funds the VA loan program and keeps it running with no monthly mortgage insurance. You can pay it at closing or roll it into the loan — and many veterans are fully exempt, most notably those receiving VA disability compensation.
VA funding fee by down payment
The fee depends on your down payment and whether it is your first VA loan. A bigger down payment lowers the fee, and the streamline refinance (IRRRL) is a flat 0.5%. Rates below are for purchase and construction loans.
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% to less than 10% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
| Cash-out refinance | 2.15% | 3.3% |
| IRRRL (streamline) | 0.5% | 0.5% |
What the fee costs in dollars
Because the fee is a percentage of the loan, it scales with how much you borrow. A first-use buyer with no down payment pays 2.15% — $6,450 on a $300,000 loan. Rolling it into the loan spreads that cost over the term but adds a little interest.
| Loan amount | Funding fee |
|---|---|
| $200,000 | $4,300 |
| $300,000 | $6,450 |
| $400,000 | $8,600 |
| $500,000 | $10,750 |
Who is exempt from the funding fee
You pay no funding fee if you are receiving VA compensation for a service-connected disability, are eligible for it but receiving retirement or active-duty pay instead, or are a surviving spouse receiving Dependency and Indemnity Compensation. Active-duty members awarded a Purple Heart on or before closing are also exempt.
If you are exempt, that eliminates the single largest upfront cost of a VA loan — worth thousands of dollars — on top of the zero-down-payment and no-mortgage-insurance benefits.
How much is the VA funding fee?
For a first-use VA purchase loan it is 2.15% of the loan amount with less than 5% down, 1.5% with 5% down, and 1.25% with 10% or more down. Subsequent uses cost 3.3% at the lowest down-payment tier.
Can I roll the VA funding fee into my loan?
Yes. You can pay it at closing or finance it as part of the loan amount, which avoids an upfront cash cost but slightly increases your monthly payment and total interest.
Who does not have to pay the VA funding fee?
Veterans receiving VA disability compensation, those eligible for it but taking retirement or active-duty pay instead, surviving spouses receiving DIC, and active-duty Purple Heart recipients are all exempt from the fee.
Why does the VA charge a funding fee?
The fee funds the VA home-loan program so it can keep offering zero-down loans with no monthly mortgage insurance and no taxpayer cost. It replaces the mortgage insurance that conventional and FHA borrowers pay.