Understanding VA Funding Fee and Other Home Loan Closing Costs

April 4, 2023
Last updated:
May 23, 2023
In This Article

Loan Fee Rates for Loans Closing On or After April 7, 2023 and prior to November 14, 2031

VA Purchase or Construction Loans

Down Payment AmountFunding Fee Percentage
First UseLess than 5%2.15%
5% or more1.5%
10% or more1.25%
Subsequent UseLess than 5%3.3%
5% or more1.5%
10% or more1.25%

VA Cash-Out Refinance

Funding Fee Percentage
First Use2.15%
Subsequent Use3.3%

Other VA Home Loan Types

Loan TypeFunding Fee Percentage
Interest Rate Reduction Refinance Loan (IRRRLs)0.5%
Manufactured Home Loans (not permanently affixed)1%
Loan Assumptions0.5%
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.

What is the VA funding fee?

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.

Will I have to pay the VA funding fee?

You won’t have to pay a VA funding fee if you meet specific requirements. For example, if you’re receiving VA compensation for a service-connected disability, or you’re eligible to receive VA compensation for a service-connected disability. Still, you’re receiving retirement or active-duty pay instead; you won’t have to pay the fee. Other situations where you may be exempt from paying the fee include if you’re receiving Dependency and Indemnity Compensation (DIC) as the surviving spouse of a Veteran or if you’re a service member who has received a proposed or memorandum rating before the loan closing date that says you’re eligible to get compensation because of a pre-discharge claim, or if you’re a service member on active duty who, before or on the loan closing date, provides evidence of having received the Purple Heart.

Funding Fee Refunds

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.

How to pay the VA funding fee

When paying the VA funding fee, you have two options. You can include the fee in your loan and pay it off over time or pay the total cost at closing.

The VA funding fee is essential to the VA home loan program. It helps to make homeownership more accessible for Veterans, service members, and survivors while also ensuring that the program remains sustainable for years to come. If you have any questions about the VA funding fee or the VA home loan program, don’t hesitate to get in touch with your VA regional loan center.

VA Funding Fee Rate Charts

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.

Other Loan Costs

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.

Who pays for the closing costs?

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.


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.

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