The VA Funding Fee: What It Is, What It Costs, and When It’s Waived

The VA Funding Fee: What It Is, What It Costs, and When It’s Waived

If you’re using a VA loan, you’ve probably heard about the VA funding fee.

And usually the next question is:

“Wait… what is that?”

Let’s clear it up.

What Is the VA Funding Fee?

The VA funding fee is a one-time fee required on most VA home loans.

It helps keep the VA loan program running and allows it to offer:

• $0 down payment
• No private mortgage insurance (PMI)
• Competitive interest rates

Instead of charging monthly mortgage insurance like conventional loans, the VA uses this one-time fee structure.

How Much Is the VA Funding Fee?

The amount depends on:

• Whether it’s your first time using a VA loan
• Your down payment amount
• Whether it’s a purchase or refinance

For First-Time Use (Purchase)

With 0% down:
2.15% of the loan amount

With 5% down:
1.50%

With 10% down:
1.25%

For Subsequent Use

With 0% down:
3.30%

Putting money down reduces the fee.

Can the VA Funding Fee Be Financed?

Yes.

Most veterans choose to roll the funding fee into the loan amount rather than paying it out of pocket.

That means:

You don’t have to bring extra cash to closing for it.

It simply becomes part of your total loan balance.

When Is the VA Funding Fee Waived?

This is the important part many people miss.

You may be exempt if you:

• Have a service-connected disability rating
• Are receiving VA disability compensation
• Are eligible for compensation but receiving retirement pay instead
• Are a surviving spouse of a veteran who died in service or from a service-connected disability

If you qualify for an exemption, you do not pay the funding fee at all.

That can represent significant savings.

Is the VA Funding Fee Worth It?

When you compare it to conventional loans that require:

• 3%–5% down
• Monthly PMI
• Stricter credit overlays

The VA loan benefit is still extremely powerful for eligible borrowers.

Even with the funding fee.

The Bottom Line

The VA funding fee is not a penalty.

It’s part of how the program remains sustainable while offering some of the most flexible financing available.

The key is knowing:

• What your specific percentage is
• Whether you’re exempt
• How it affects your total loan structure

That’s something we calculate clearly before you ever go under contract.