Latest VA Funding Fee Rates and Exemptions
The VA funding fee is something every veteran has to pay unless you meet one of the exemption requirements.
The VA funding fee is a one-time fee paid to the Department of Veterans Affairs (VA) to reduce taxpayer burden and ensure the program's longevity for future generations.
The Department of Veterans Affairs charges a one-time funding fee on VA loans. These fees go directly toward supporting the VA loan program and should not be confused with origination fees — which are fees charged by your lender.
For the most part, all VA loans come with a funding fee, though there are some exceptions. In some cases, a VA borrower may be exempt from the fee. It may also be rolled into the loan amount and paid off over time.
What is the VA Funding Fee?
The exact funding fee you’re charged depends on the type of loan you’re getting, your loan balance, the size of your down payment, and the number of times you’ve used your VA loan benefit. Generally speaking, you’ll pay less for your funding fee the larger your down payment is.
See this VA funding fee chart to gauge how much you’ll likely owe on a VA purchase or construction loan:
VA Purchase Funding Fee Rates in 2021
| Down Payment | Fee for First Use | Fee After First Use |
|---|---|---|
| None | 2.30% | 3.60% |
| 5% to 10% | 1.65% | 1.65% |
| 10% or More | 1.40% | 1.40% |
If you’re using a product other than a VA purchase or construction loan, here’s how those funding fees break down:
VA Refinance and Other Funding Fee Rates in 2021
| VA Loan Type | Funding Fee |
|---|---|
| IRRRLs | 0.5% |
| Cash-out refinance | 2.3% on first use, 3.6% on subsequent uses |
| NADL | 1.25% for purchases, 0.5% on refinances |
| Loan assumptions | 0.5% |
| Manufactured home loans | 1% |
| Vendee loans | 2.25% |
Can the VA Funding Fee be Financed?
If you can’t afford your funding fee, you have the option to finance it. Your lender can simply add the fee to your total loan balance, and you’d pay it off monthly, as you do the rest of your mortgage.
VA Funding Fee Exemptions
Not every borrower has to pay the VA funding fee. Some Veterans and service members are exempt due to disability status or military honors.
Here are the borrowers who are currently exempt from VA funding fees when using their loan benefit:
- Service members who receive VA compensation for a service-connected disability (or who are eligible to, but receive retirement or active-duty pay instead)
- Surviving spouses of Veterans who were totally disabled at death or who died in service or due to a service-connected disability (must also be receiving DIC pay)
- Veterans or active-duty service members awarded a Purple Heart
- Service members eligible for compensation based on a pre-discharge review
If you’re unsure if you qualify for an exemption, look to your Certificate of Eligibility. It should indicate if you’ll need to pay a funding fee.
VA Funding Fee Refund
If you’re awarded disability compensation after your VA loan closes, you may qualify for a funding fee refund. To apply for this, you’d need to talk to your VA Regional Loan Center for more guidance.
