What Is the VA Funding Fee?
Reviewed by Ramez Malki, NMLS 315466 · Last verified October 2026
The VA funding fee is a one-time upfront cost — not monthly mortgage insurance. Some veterans don’t pay it at all. Here’s the complete breakdown of amounts, exemptions, and how it works.
What Is the VA Funding Fee?
The VA funding fee is charged on most VA loans to sustain the VA loan guaranty program. Because VA loans require no down payment and no monthly MI, this one-time fee is how the program remains available for future veterans. It is calculated as a percentage of the loan amount and varies based on down payment, first vs. subsequent use, and loan type.
Funding Fee — Purchase Loans
| Down Payment | First-Time Use | Subsequent Use |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5% to less than 10% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Funding Fee — Refinance Loans
| Loan Type | Fee |
|---|---|
| VA IRRRL (Streamline Refinance) | 0.50% |
| VA Cash-Out Refinance — First Use | 2.15% |
| VA Cash-Out Refinance — Subsequent Use | 3.30% |
Who Is Exempt From the Funding Fee?
- Veterans receiving VA compensation for a service-connected disability
- Veterans entitled to receive VA compensation but who receive retirement or active-duty pay instead
- Unremarried surviving spouses of veterans who died in service or from a service-connected disability
- Active-duty members with a proposed or memorandum VA disability rating prior to closing
- Active-duty members awarded the Purple Heart on or before the closing date
Your Certificate of Eligibility (COE) will indicate whether you are exempt. If you have a pending disability claim, verify your status early in the process.
Can the Funding Fee Be Financed?
Yes. The fee can be rolled into the loan amount, paid out of pocket, covered by the seller, or paid via lender credits. Most veterans choose to finance it to avoid additional cash at closing.
Questions About the Funding Fee?
Many veterans don’t realize they qualify for a full exemption. At Lendia, we check your COE status from the very start. Get a free quote and we’ll confirm your status today.
The fee in dollars (illustrative example, not a quote)
On a $500,000 loan with less than 5% down, the first-use fee at 2.15% is $10,750. The subsequent-use fee at 3.30% is $16,500. On an IRRRL with a $500,000 balance, the 0.50% fee is $2,500. A cash-out refinance for $500,000 would carry the same 2.15% or 3.30% rates as a purchase with less than 5% down. Exempt borrowers pay none of it.
Ways to handle the fee
- Finance it. Adds to the loan amount, so the interest you pay includes the fee.
- Pay it in cash. Keeps the loan smaller, at the cost of cash on closing day.
- Negotiate it with the seller or lender credits. The contract has to allow it.
- Reduce it with a larger down payment. Moving from under 5% to 5% down changes the rate from 2.15% to 1.50% on a first purchase.
Checking your exemption before closing
Look at your COE, since an exemption flag there is what the lender relies on. If you hold a disability rating, confirm the document matches your current status. If a claim is still pending, tell us the filing date; whether the fee applies can depend on timing, and we will check how it affects your closing.
Why the amount varies
The fee steps down as your down payment rises and is higher on repeat use of the benefit with a small down payment. The IRRRL carries the lowest fee of the group. Knowing which row of the tables above applies to you before you shop makes your cash-to-close estimate far more accurate, and it is one of the first things we confirm.
Frequently asked questions
Is the funding fee tax-deductible?
Whether any closing cost is deductible depends on your situation. Please consult a tax professional.
Does financing the fee affect the loan limit?
It raises the loan amount, which matters when you have partial entitlement, because the loan is measured against the limit your remaining entitlement supports.
Do surviving spouses pay the fee?
Unremarried surviving spouses of qualifying service members are exempt, as listed above. The COE confirms the status.