What is the VA funding fee, and do I have to pay it?

Short answer: The funding fee helps support the VA home loan program. It is generally charged once when using a VA-backed or VA direct home loan to buy, build, improve, or refinance a home, unless the borrower qualifies for an exemption. The fee is separate from lender closing costs and interest.

Who may be exempt from the VA funding fee?

VA lists exemptions for certain borrowers, including some Veterans receiving or eligible to receive compensation for a service-connected disability, qualifying surviving spouses receiving Dependency and Indemnity Compensation (DIC), some service members with a pre-discharge proposed or memorandum rating, and active-duty service members who provide evidence of a Purple Heart by closing. Eligibility depends on your circumstances and VA’s rules. Ask your lender to verify the exemption status shown in the VA system before closing.

If VA later awards qualifying disability compensation retroactive to before the loan closing date, a borrower may be eligible for a funding-fee refund. Contact VA or your lender to ask about the applicable process and effective date.

How much is the funding fee?

There is not one fee amount for every VA loan. The percentage depends on the loan type, total loan amount, and—for some purchase or cash-out loans—factors such as first or subsequent use and down payment. IRRRL and other loan types can have different rates. VA updates its official rate tables, so check VA’s current funding fee chart rather than relying on a calculator or article that may be out of date.

Can I finance the VA funding fee?

The funding fee can generally be paid at closing or financed into the loan, if permitted for the transaction. Financing it increases the amount borrowed and the interest paid over time. On a purchase or construction-permanent loan, VA says other closing costs generally cannot be financed into the loan amount. Ask your lender to show both the upfront and financed-cost scenarios.

For other cash-to-close expenses, review VA loan closing costs. For possible zero-down financing, see VA down payments.

Verify the funding fee on your estimate

• Ask the lender which current VA fee rate and loan-use category it applied.
• If you may be exempt, ask how the lender verifies your status with VA before closing.
• Compare the amount due at closing with the amount financed, and note how financing changes the loan balance and payment.
• Confirm the final fee and any exemption on your Closing Disclosure; contact the lender or VA if something does not match your records.

Official sources

• VA: Funding fee rates, exemptions, and closing costs
• VA: Interest Rate Reduction Refinance Loan