Updated November 4, 2026
What the funding fee is
The VA funding fee is a one-time charge that helps keep the loan program running. It is a percentage of the loan amount. VA.gov says it can be paid in cash or added to the loan, and that on a purchase, the funding fee is the only closing cost that can be financed. It can also be paid by the seller, the lender or another party.
The published rates
VA.gov lists these rates for purchase and construction loans, effective April 7, 2023:
- Less than 5 percent down: 2.15 percent for first use, 3.3 percent after first use
- 5 percent or more down: 1.5 percent
- 10 percent or more down: 1.25 percent
Cash-out refinances are 2.15 percent for first use and 3.3 percent after. An interest rate reduction refinance is 0.5 percent. Rates can change, so check VA's funding fee page and ask your lender for the exact figure on your loan.
Who is exempt
According to VA, you do not pay the funding fee if you:
- Receive VA compensation for a service-connected disability
- Are eligible for that compensation but receive retirement or active-duty pay instead
- Are a surviving spouse receiving Dependency and Indemnity Compensation (D.I.C.)
- Are a service member with a proposed or memorandum rating before closing on a pre-discharge claim
- Are an active-duty member who provides evidence of a Purple Heart on or before closing
Your Certificate of Eligibility will usually show whether you are exempt, and your lender can confirm.
Refunds
VA says you may be refunded the fee if you are later awarded service-connected compensation retroactive to before your closing date. A rating received after closing does not qualify if it is only a proposed or memorandum rating.
Other closing costs and seller help
Only the funding fee can be financed on a purchase. All other fees must be paid at closing. VA says sellers or builders may cover some or all of a buyer's closing costs, and that seller concessions such as funding fee credits, debt payoff and prepaid hazard insurance are capped at 4 percent of the home's reasonable value shown on the Notice of Value. Ask your lender how this applies to your deal.
Why it matters
On a large loan, whether you owe the fee, and how much, makes a real difference to your cash-to-close or loan balance. Ask your lender for a Loan Estimate that shows it clearly, and compare estimates from more than one lender.
An example of how it works
Say the fee rate on your loan is a certain percentage. The dollar amount is that percentage of the total loan amount. If you roll it into the loan, your loan balance goes up by that amount, and you pay interest on it. If you pay it in cash, you have more cash due at closing. Ask your lender to show both options on a Loan Estimate so you can compare. Dollar figures vary by loan, so get a quote from your lender.
How to find out if you are exempt
- Look at your Certificate of Eligibility, which usually shows funding fee exemption status.
- Check your VA disability benefits letter if you receive compensation.
- Ask your lender to confirm before you receive a Loan Estimate.
If your rating is still pending, ask your lender and VA what applies to you, since VA says a rating received after closing may not qualify for a refund.
Funding fee on other VA loans
VA also lists funding fees for other loan types, such as 0.5 percent for an interest rate reduction refinance and 0.5 percent for a loan assumption. These are separate from a purchase. If you later refinance, ask your lender what applies.
Next step
We can introduce you to agents who work with VA buyers and can explain how fees and seller credits fit into an offer.
Disclosure: TheBayPros' owner is related to Krystal Crichlow (eXp Realty), who may be among the agents introduced to you. You can choose any agent you like. We are not a lender and do not make loans.
Frequently asked questions
Is the funding fee the same as mortgage insurance?
No. VA loans do not have monthly mortgage insurance. The funding fee is a one-time charge, unless you are exempt.
Does a bigger down payment lower the fee?
Per VA's published table, yes. The rate is lower with 5 percent or more down, and lower again at 10 percent or more.
Can I roll the fee into the loan?
Yes. VA says it can be paid in cash or included in the loan.