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| Down Payment Amount | Funding Fee Percentage | |
| First Use | Less than 5% | 2.15% |
| 5% or more | 1.5% | |
| 10% or more | 1.25% | |
| Subsequent Use | Less than 5% | 3.3% |
| 5% or more | 1.5% | |
| 10% or more | 1.25% |
| Funding Fee Percentage | |
| First Use | 2.15% |
| Subsequent Use | 3.3% |
| Loan Type | Funding Fee Percentage |
| Interest Rate Reduction Refinance Loan (IRRRLs) | 0.5% |
| Manufactured Home Loans (not permanently affixed) | 1% |
| Loan Assumptions | 0.5% |
| Native American Direct Loan (Non-IRRRL) | 1.25% |
If you’re a Veteran, service member, or survivor planning to use a VA-backed or VA-direct home loan, you’ll likely need to pay a VA funding fee. This one-time payment helps lower the loan cost for U.S. taxpayers since the VA home loan program doesn’t require down payments or monthly mortgage insurance.
So, what is the VA funding fee exactly? You pay a fee when you close your VA-backed or VA-direct home loan. The amount you’ll pay depends on the type of loan you get, the total amount of your loan, and other factors, such as whether it’s your first time using a VA-backed or VA-direct home loan and your down payment amount. Your lender will also charge interest on the loan and closing fees.
You won’t have to pay a VA funding fee if you meet specific requirements, such as the following scenarios:
You can contact your VA regional loan center if you’re eligible for a refund of the VA funding fee. You may qualify for a refund if you’re later awarded VA compensation for a service-connected disability, and the effective date of your VA compensation is retroactive to before the date of your loan closing.
When paying the VA funding fee, you have two options:
When buying a home using a VA-backed loan, it’s essential to understand the VA funding fee rate charts. These charts, effective as of January 1, 2020, based on Public Law 116-23, help determine the amount you’ll have to pay. The fee amount depends on various factors, including the type of loan you’re getting, the total loan amount, and whether you’ve used a VA-backed loan before.
For example, let’s say you’re buying a $350,000 home and making a down payment of $17,500 (5% of the loan amount). If this is your first time using a VA-backed loan, you will pay a VA funding fee of $6,412.50, 1.835% of the $332,500 loan amount. It’s important to note that the VA funding fee applies only to the loan amount, not the home’s purchase price.
To determine your exact funding fee amount, review the VA funding fee rate charts below. It’s also crucial to discuss any questions you have with your lender, who can help you understand your costs and options.
In addition to the VA funding fee, there are other closing costs that you should be aware of when getting a home loan. While the VA does not determine most of your loan details, your home loan lender will determine the interest rate, discount points, and other closing costs. These rates may vary from lender to lender.
It’s essential to keep in mind that adding the VA funding fee and other loan costs to your loan could result in you owing more than the fair market value of the home, which could reduce the benefits of refinancing and make it harder to pay off your loan balance in the future.
When it comes to who pays for which closing costs, the seller is responsible for certain expenses, such as a commission for real estate professionals and the termite report (unless you’re using a refinancing loan). Other closing costs, including the VA funding fee, loan origination fee, loan discount points, and more, can be negotiated between the buyer and seller. However, it’s important to note that there is a limit on the number of seller concessions allowed for certain closing costs, including the VA funding fee. It’s important to discuss all closing costs with your lender and negotiate with the seller to ensure you’re fully aware of all costs associated with your home loan.
What is the VA funding fee?
The VA funding fee is a one-time charge that funds the VA loan program, which offers perks like no down payment and no monthly mortgage insurance.
Who has to pay the funding fee?
Most borrowers using a VA loan must pay the funding fee, unless they qualify for an exemption.
Can the seller pay the funding fee?
Sometimes, sellers can offer credits toward closing costs, including the funding fee, though this depends on the lender and contract terms.
How much is the VA funding fee?
It ranges from 0.5% to 3.3% of the loan amount, depending on things like loan type, down payment, and first or subsequent use of VA loan benefits.
Can the funding fee be financed?
Yes, you can roll the funding fee into your loan, which will increase your total loan amount but helps you avoid paying it upfront.
Is the funding fee refundable?
You may qualify for a full refund if you paid the fee and are later awarded VA disability compensation retroactive to before closing.
Does the funding fee apply to all VA loans?
Yes, it applies to purchases, new construction, and refinancing, though the rate varies by loan type.
How do I know if I’m exempt?
Your Certificate of Eligibility (COE) or a Verification of VA Benefits will detail your exemption status.
Does the funding fee change with a down payment?
Yes, putting down 5% or more can reduce the fee significantly.
Do I have to pay the fee again if I reuse my VA loan benefit?
Yes, using your VA loan benefit again typically comes with a higher fee, unless you’re exempt.
In conclusion, getting a VA loan can be a great option for eligible borrowers who are looking to buy a home or refinance their current mortgage. With features such as no down payment, competitive interest rates, and no private mortgage insurance, a VA loan can help make homeownership more accessible and affordable.
At Sammamish Mortgage, we have years of experience helping veterans and active-duty military members navigate the VA loan process. Our team of knowledgeable and friendly loan officers can guide you through the entire process, from pre-qualification to closing.
If you’re interested in learning more about VA loans or want to apply for one, contact us today to schedule a consultation. We’re here to help you achieve your homeownership goals and provide you with exceptional service every step of the way.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.