What is the VA funding fee?

The VA funding fee is a one-time payment on VA home loans that helps keep the VA loan program running without taxpayer funding. It replaces PMI on VA loans. The fee ranges from 1.25 to 3.30 percent of the loan amount depending on down payment, prior VA loan use, and loan type.

Can the VA funding fee be rolled into the loan?

Yes. Most VA borrowers finance the funding fee into their loan amount rather than paying it in cash at closing. This increases your monthly payment slightly but means no out-of-pocket cost at closing.

VA Funding Fee Calculator

Q: Who is exempt from the VA funding fee?

Veterans receiving VA compensation for a service-connected disability, Purple Heart recipients serving on active duty, and surviving spouses eligible for VA loans are exempt from the funding fee under 38 CFR 36.4313.

Calculate your one-time VA funding fee. Current rates per 38 CFR 36.4313, effective April 7, 2023.

38 CFR 36.4313 rates Purchase and refinance Exemption handling

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Your VA Loan

Home purchase price

Down payment

Most VA borrowers put 0% down. Down payment: 0.0%

Loan type

First time using VA loan benefit?

If you have previously had a VA loan paid off, this is still "first use" for fee purposes if that loan is fully closed.

Funding fee exempt?

Your Funding Fee

Funding fee amount

2.15% of base loan

$8,600

Base loan amount

$400,000

Total loan (fee financed)

$408,600

Monthly cost added (if financed, est.)

$55.80

Cash option (pay at closing)

$8,600

Current VA funding fee rates

Fees are set by 38 CFR 36.4313 and the Blue Water Navy Vietnam Veterans Act of 2019. The rates below have been effective since April 7, 2023.

Purchase and construction loans

Down payment	First use	Subsequent use
Less than 5%	2.15%	3.30%
5% to 9.99%	1.50%	1.50%
10% or more	1.25%	1.25%

Refinance loans

Refinance type	First use	Subsequent use
Cash-out refinance	2.15%	3.30%
IRRRL (streamline)	0.50%	0.50%

Note: Rates for the National Guard and Reserve are the same as regular military service, following the Blue Water Navy Act of 2019 which eliminated the previously higher rates for Reserve members.

Who is exempt from the VA funding fee?

You do not have to pay the VA funding fee if you fall into any of these categories under 38 CFR 36.4313:

Veterans receiving VA disability compensation for a service-connected disability.
Veterans entitled to receive VA disability compensation but who are receiving retirement pay instead.
Service members on active duty who have received the Purple Heart (added by legislation effective January 1, 2020).
Surviving spouses of veterans who died in service or from a service-connected disability.
Service members with a proposed or memorandum rating of service-connected disability issued before loan closing.

Your VA Certificate of Eligibility (COE) typically shows your funding fee status. If you believe you are exempt but your COE does not reflect that, contact the VA to update your status before closing.

How to pay the funding fee

You have three options for paying the VA funding fee.

Finance it into the loan. This is the most common option. The fee is added to your loan amount, so it slightly increases your monthly payment but requires no cash at closing.
Pay in cash at closing. You pay the full fee upfront. This keeps your loan balance (and therefore your monthly payment) lower.
Seller or lender pays. In some cases, the seller or lender agrees to pay the funding fee as part of closing cost concessions. This is less common but worth asking about.

Why the VA funding fee exists

The VA home loan program does not require private mortgage insurance. Instead, the funding fee partially offsets the cost of the VA guarantee, which protects lenders if borrowers default. Funding fees go directly to the VA to keep the program running without taxpayer dollars. Over the life of the program, this has saved veterans tens of billions of dollars that would have gone to private insurers.

VA funding fee vs. PMI vs. FHA MIP

For eligible veterans, VA loans are almost always cheaper than conventional or FHA loans over the life of the loan despite the funding fee.

Feature	VA	Conventional (with PMI)	FHA
Insurance type	Funding fee (one-time)	PMI (monthly)	MIP (upfront + monthly)
Minimum down	0%	3% to 5%	3.5%
One-time cost (0% down, first use)	2.15%	0%	1.75% upfront
Monthly ongoing cost	$0 (fee is one-time)	0.19% to 2.29% / year	0.15% to 0.75% / year
Removable?	N/A (one-time)	At 78-80% LTV	After 11 years or never (depends on down)
Credit score affects cost?	No	Yes (large impact)	No

Frequently asked questions

Can I get the funding fee refunded if I later qualify as disabled?

Yes. If the VA grants a service-connected disability rating with an effective date before your loan closing, you can request a refund of the funding fee you paid. Submit a refund request through your lender or directly to the VA.

Does the funding fee count toward my VA entitlement?

No. The funding fee is separate from your entitlement calculation. Your entitlement is based on the loan amount, not the fee.

Is the VA funding fee tax deductible?

The VA funding fee has historically been treated similarly to PMI for federal tax purposes. The federal PMI deduction expired after 2021 and has not been renewed, so for most borrowers it is currently not deductible. Consult a tax professional for your specific situation.

Does the funding fee apply to the Native American Direct Loan (NADL)?

Yes, with different rates. NADL funding fees are 1.25 percent for first use and 2.00 percent for subsequent use regardless of down payment.

Can my funding fee be waived if I have a very low disability rating?

Any level of VA disability compensation (10 percent and up) exempts you from the funding fee, provided you are currently receiving the compensation (or entitled to receive it but taking retirement pay instead). There is no minimum rating threshold.