The VA funding fee is a one-time payment required for most VA home loans. It is designed to offset the costs of the VA loan program, ensuring it remains sustainable for future veterans. The fee is paid directly to the Department of Veterans Affairs (VA) and acts as a safeguard for mortgage lenders, covering potential losses in case of loan default. The amount of the fee varies based on factors like the loan type, the borrower’s military service status, down payment size (if any), and whether the borrower has used the VA loan benefit before. Borrowers can choose to pay the fee upfront or roll it into their loan balance. Certain veterans, like those with service-related disabilities, may be exempt from paying this fee.
| Down Payment Amount | Funding Fee Percentage | |
| First Use | Less than 5% | 2.15% |
| 5% or more | 1.50% | |
| 10% or more | 1.25% | |
| Subsequent Use | Less than 5% | 3.30% |
| 5% or more | 1.50% | |
| 10% or more | 1.25% | |
| Disabled Veteran | Exempt |
| Funding Fee Percentage | |
| First Use | 2.15% |
| Subsequent Use | 3.3% |
| Disabled Veteran | Exempt |
| Loan Type | Funding Fee Percentage |
| Interest Rate Reduction Refinance Loans (IRRRLs) | 0.5% |
| Manufactured Home Loans (not permanently affixed) | 1% |
| Loan Assumptions | 0.5% |
| Native American Direct Loan (Non-IRRRL) | 1.25% |
| Disabled Veteran | Exempt |
