How Much is the VA Funding Fee?

VA Funding Fee

What are VA Funding Fees? A set fee applied to every purchase loan or refinance.

Home ownership is a priority for many U.S. veterans and the incredible benefits of the VA Loan Program are helping thousands of service members achieve this goal.

VA loans are one of just two no-down payment loan programs available today. Credit and income requirements are generally more lenient with VA loans than conventional mortgages, and the VA caps what veterans can pay in costs and fees.

But there’s one cost unique to this incredible loan program: the VA Funding Fee.

The VA Funding Fee is a set fee applied to every purchase loan or refinance. The proceeds go directly to the VA and help cover losses on the few loans that go into default.

The fee changes depending on several factors, including the nature of the borrower’s service, whether the borrower has a prior VA loan and if there’s a down payment. Veterans receiving disability compensation for a service-connected disability, including those who are entitled to receive disability compensation, are exempt from paying the funding fee.

Regular military members pay slightly lower Funding Fees than Reservists and National Guard members.

Regular Military: 

Regular Military Personnel
Down payment Funding Fee (1st use) Funding Fee (subsequent use)
None 2.15 percent 3.3 percent
5-10 percent 1.5 percent 1.5 percent
10 percent and up 1.25 percent 1.25 percent

One third of VA borrowers don’t pay the VA Funding Fee. Find out if you’re eligible to be one of them: Are You Eligible for a VA Funding Fee Refund?

Reserves and the National Guard:

Reserve & National Guard Personnel
Down payment Funding Fee (1st use) Funding Fee (subsequent use)
None 2.4 percent 3.3 percent
5-10 percent 1.75 percent 1.75 percent
10 percent and up 1.5 percent 1.5 percent

Borrowers can combine the Funding Fee with their loan and many borrowers choose this option. This adds a few dollars onto their monthly mortgage payment.

For example, the 2.15 percent funding fee on a $200,000 mortgage comes out to $4,300. On a fixed-rate loan at 30 years and 6 percent, rolling in the Funding Fee adds $26 per month to your principal and interest payment.

Veterans wanting a VA refinance must also pay a Funding Fee. The VA has two major refinancing programs, the Interest Rate Reduction Refinancing Loan, better known as the VA Streamline, and a VA Cash-Out refinancing.

The VA Streamline requires veterans to pay a 0.5 percent Funding Fee, regardless if the veteran is using the loan for a first or subsequent time.

Veterans who want a Cash-Out refinance pay a slightly higher fee.

Cash-Out Refinance Loans:

Funding Fee for Cash-Out Refinancing
Type of Veteran Funding Fee (1st use) Funding Fee (2nd use)
Regular Military 2.15 percent 3.3 percent
Reserves/National Guard 2.4 percent 3.3 percent

To learn more about the process, check out the VA Loan Complete Guide.

Check your VA Loan eligibility here →

Photo courtesy of Images_of_Money