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How much is the VA funding fee?
The VA’s financing fee is a one-time fee paid at closing, allowing borrowers to obtain a VA loan without the need for a down payment.
The cost of a VA’s financing fee is the percentage of the loan amount, which varies by borrower based on:
- Do you buy a house or refinance?
- Is this the first time I’ve got a VA loan?
- Whether or not you’re paying a down payment (and if so, how much)
Why do VA funding fees exist?
VA funding fees exist to help protect the valuable benefits of the VA loan program without incurring additional costs to taxpayers. The government guarantees these loans, so funding fees act as a protection for lenders in case the borrower stops paying off the loan. Without it, taxpayers will ultimately become hooked for defaults.
How are VA funding fees different from mortgage insurance?
| VA Funding Fees | Mortgage insurance |
|---|---|
| Applies to VA loans only | Applicable to borrowers who will receive traditional or FHA loans with a down payment of less than 20% |
| Helps protect lenders | Helps protect lenders |
| One-time fee | Continuous insurance fees |
How much is the VA loan fee?
Whether you purchase a home as an active military, veteran, or a member of a sanctuary or National Guard, here are the amounts you will pay for your VA funding fee: If you are out, the same fee structure applies VA Construction Loan.
| down payment | I’ll use it first | After first use |
| Less than 5% | 2.15% | 3.3% |
| 5%-9.99% | 1.5% | 1.5% |
| Over 10% | 1.25% | 1.25% |
There is at least one exception to the initial usage fee. If you use your previous qualification on a manufactured home, you may need to pay the VA funding fee at the initial usage fee. There are a few other exceptions.
| Loan type | VA Funding Fees |
|---|---|
| Manufactured mortgage | 1% |
| Loan assumption | 0.5% |
| Vendee loans to purchase property acquired by VA | 2.25% |
| Native American Direct Loan | 1.25% |
VA funding fees for refinancing
You can also use the VA loan program Refinance your mortgage. Funding fees are as follows:
Examples of VA funding fees
So, how much does the VA funding fee cost? Let’s say you took out a mortgage for $300,000 and didn’t make a down payment at all. As this is my first time using a VA loan, the funding fee is $6,450 based on a 2.15% fee. For the second time using VA loan benefits, the funding fee will increase to 3.3% or $9,900.
VA Funding Fee Waiver
Most VA loan borrowers will have to pay the funding fee, with a few exceptions. You do not need to pay this fee:
- Voiding and receiving VA coverage for impairments related to your service
- Receive military retirement or active salary in lieu of compensation for service-connected disability
- Active and you were awarded a Purple Heart
- Eligible for compensation as a result of pre-discharge
- A surviving military spouse whose partner has died of a service-related disorder or has died of service and is being compensated for dependence and compensation.
How to pay VA loan funds
You can pay your VA funding fee in one of two ways.
- Pay in advance with your rest Closure costs
- By involving the fees in your mortgage and paying it over time with interest
If you can afford to pay the fee when it closes, you can save interest.
VA Funding Fee Refund
If you have already paid a VA funding fee in the past, you may be able to recover it if you have received compensation for service-related disability. This is a unique situation, so contact a VA loan expert to check your case. You can call 877-827-3702 from 8am to 6pm Monday through Friday to talk to the VA Loan Officer.
