The VA funding fee is a federal program fee that generally applies to eligible home buyers using a VA loan in Washington and Oregon. In this guide, you’ll learn the three practical questions most borrowers ask: what affects the fee, who may be exempt, and whether the fee can be financed. For borrowers who choose not to make a down payment, this fee typically ranges from 2.15% to 3.3% of the loan amount. For many home buyers, the advantage of having no down payment more than makes up for the funding fee cost.
VA loans are a popular mortgage product among military folks in Washington State and Oregon (our primary areas of operation). This program offers several key advantages, such as having no down payment or mortgage insurance.
VA loans are unique in that they receive government backing. In short, the federal government guarantees these loans. This guarantee gives lenders an added layer of protection from losses related to borrower default. It also allows eligible home buyers in Washington and Oregon to buy a house with no money down.
There is a funding fee associated with the VA loan program. This fee is partly what enables the program to exist in the first place. While this article is written for buyers in Washington and Oregon, the funding fee itself is part of the federal VA loan program rather than a state-specific rule.
“Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies…”
The answer usually comes down to three borrower decision points: whether this is your first time using a VA loan benefit, whether you plan to make a down payment, and which service category applies to you.
1) Have you used a VA loan before?
Generally speaking, there’s a lower fee for people who are using the program for the first time and a higher one for subsequent use.
2) Are you making a down payment?
For most borrowers who use the VA loan program in Washington and Oregon, the VA funding fee ranges from 2.15% to 3.3% of the loan amount. This is when the borrower makes no down payment (one of the advantages of the program). Borrowers who choose to make a down payment of some kind typically pay a lower funding fee, as low as 1.25% in some cases.
3) What is your service category?
The borrower’s military category also matters, including whether you qualify as active duty, National Guard, or reserves.
These are the main factors that usually drive the fee, and they’re the ones borrowers should confirm with their lender before locking in expectations.
As mentioned above, most home buyers in Washington and Oregon who use the VA loan program have to pay a funding fee. But there are some instances where the fee is not required.
Washington and Oregon home buyers who use a VA loan can either finance the funding fee or pay it in cash. The Department of Veterans Affairs states as much on their website: “You [the borrower] have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time.”
Many borrowers choose to “roll” the funding fee into the loan. That is, they choose to combine the fee with the actual loan amount being borrowed, and finance the total amount over the long term. This prevents the borrower from having to pay it out of pocket. Others choose to pay the fee upfront, so it doesn’t increase their monthly payments.
If keeping your cash-to-close as low as possible is the priority, financing the fee may be the better fit because it preserves more money for moving costs, reserves, or other home-buying expenses. If your main goal is limiting the amount you finance over time, paying the fee upfront may make more sense because it avoids adding that cost to the loan balance. The right choice depends on whether you value upfront flexibility more than long-term payment control.
Sammamish Mortgage can help VA borrowers in Washington and Oregon compare options and plan next steps. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been providing several mortgage programs and products with flexible qualification criteria to borrowers across the Pacific Northwest. Visit our website to get an instant rate quote, use our online mortgage calculator, or reach out to us if you are ready to get pre-approved for a mortgage.
The VA funding fee is a federal program fee that generally applies when an eligible borrower uses a VA home loan. According to the Department of Veterans Affairs, the fee helps reduce the cost to taxpayers because VA loans can allow no down payment and do not require monthly mortgage insurance.
For many borrowers who make no down payment, the VA funding fee typically ranges from 2.15% to 3.3% of the loan amount. The exact amount depends on factors such as whether it is your first use of a VA loan benefit, whether you make a down payment, and which service category applies to you.
Yes, the funding fee itself is part of the federal VA loan program rather than a state-specific rule. While borrowers in Washington and Oregon use the same federal framework, the fee still varies based on borrower-specific factors like prior VA loan use, down payment, and service category.
Yes. Borrowers who choose to make a down payment typically pay a lower funding fee than borrowers who put nothing down. In some cases, the fee can be as low as 1.25%.
Generally, yes. First-time VA loan users typically have a lower funding fee, while subsequent use usually results in a higher fee. This is one of the main factors borrowers should confirm with their lender.
According to official program guidelines, some borrowers may not have to pay the fee. This can include a veteran currently receiving VA compensation for a service-related disability, a veteran who would be entitled to receive compensation for a disability if not receiving retirement or active duty pay, or a surviving spouse of a veteran who died in service or from a service-connected disability.
Most borrowers cannot avoid the fee unless they qualify for an exemption under VA guidelines. Exemptions may apply in certain disability-related cases or for some surviving spouses, so eligibility should be verified before closing.
Yes. VA borrowers in Washington and Oregon can either finance the funding fee or pay it in cash. Many borrowers choose to roll the fee into the loan so they do not have to pay it out of pocket at closing.
That depends on your goals. Financing the fee can help keep cash-to-close lower and preserve funds for moving costs, reserves, or other expenses. Paying it upfront can make more sense if you want to avoid adding that cost to the loan balance and monthly payment.
The exemption should be confirmed with your lender before you lock in expectations for costs. Because the Department of Veterans Affairs sets the program rules, borrowers should make sure their lender has verified whether an exemption applies before closing.
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