VA Funding Fee | Check Your Cost and Exemption Options Now
A VA-backed mortgage may allow a qualified borrower to purchase a primary residence without a required down payment, but that does not mean the transaction has no upfront or financed costs. The VA Funding Fee is one expense that may apply, along with lender charges, third-party fees, prepaid property expenses, escrow deposits, and other amounts included in Cash to Close.
The amount can depend on loan purpose, first or subsequent use, down payment, assumed balance, exemption status, and the schedule in effect at closing. Review the Loan Estimate and Closing Disclosure rather than relying only on an online estimate.
This guide covers calculation factors, exemptions, loan-type differences, payment choices, refunds, and preparation. Jeff Leek helps eligible Tulsa and Oklahoma borrowers review VA options and transaction-specific questions.
This content provides general mortgage education. It is not personalized lending, legal, tax, financial, underwriting, or compliance advice. VA requirements, lender policies, exemption records, interest rates, costs, and program availability can change.
What Is the VA Funding Fee?
Key answer: The VA Funding Fee is a one-time program charge that may apply to a VA-backed or VA direct home loan unless the borrower qualifies for an exemption. The amount may depend on the loan type, down payment, applicable loan amount, and whether the borrower has used the VA home loan benefit before.
The Department of Veterans Affairs generally guarantees part of an eligible loan made by a private lender rather than originating most VA-backed mortgages directly. The fee helps support the program and lower its cost to taxpayers. Borrowers can review the official VA funding fee and closing-cost guidance for the current schedule and exemption categories.
The fee is separate from a down payment, lender charges, discount points, appraisal and title services, recording fees, prepaid taxes, homeowners insurance, escrow deposits, and earnest money. Cash to Close combines applicable charges, credits, deposits, financed amounts, and adjustments.
For a complete breakdown of those additional expenses, review the website’s guide to VA loan closing costs.
Why Does the VA Funding Fee Exist?
The fee helps support the VA home loan guaranty program. It is not a penalty for using a VA benefit, and it is not monthly private mortgage insurance. The official VA purchase-loan overview explains that qualified borrowers may receive program benefits such as no required down payment in some transactions and no monthly private mortgage insurance.
Those benefits do not make every VA loan the least expensive option. Compare the rate, points, fees, down payment, term, monthly payment, cash reserves, and expected total cost.
Zero-down eligibility also does not mean zero cash is required. Closing costs, prepaid expenses, escrow deposits, or a value-related shortfall may still apply. The complete VA no-down-payment guide explains the distinction.
How Is the VA Funding Fee Calculated?
The basic concept is the applicable funding-fee percentage multiplied by the relevant loan amount or assumed balance. That calculation is only a starting point because the correct percentage must be selected first.
The factors can include the transaction type, whether the borrower is using the VA benefit for the first time or after a prior use, the down-payment percentage on a purchase or construction loan, the assumed balance for an assumption, verified exemption status, and the fee schedule that applies on the closing date.
| Transaction Type | Borrower Situation | Down Payment or Use Category | Current Verified Funding Fee | Important Notes |
|---|---|---|---|---|
| Purchase or construction | First use | Less than 5% | 2.15% | Calculated on the applicable loan amount, not simply the purchase price. |
| Purchase or construction | First or subsequent use | 5% or more but less than 10% | 1.5% | The qualifying down payment may place the transaction in a lower fee tier. |
| Purchase or construction | First or subsequent use | 10% or more | 1.25% | The lower percentage should be compared with the additional cash committed. |
| Purchase or construction | After first use | Less than 5% | 3.3% | Prior use must be reviewed correctly; special manufactured-home history rules may apply. |
| IRRRL | Eligible refinance of an existing VA-backed loan | First or subsequent use | 0.5% | The percentage does not change based on down payment or prior use. |
| VA cash-out refinance | First use | Not based on down payment | 2.15% | After first use, the current listed rate is 3.3%. |
| VA loan assumption | Approved assumption | Based on the assumed balance | 0.5% | An exemption or unrestricted transfer may affect treatment. |
Current VA rate chart reviewed June 17, 2026. The official VA page lists these rates as effective April 7, 2023. Verify all percentages and effective dates using current VA guidance before relying on this table.
A calculator can help illustrate the arithmetic, but it cannot confirm entitlement, exemption status, first-use classification, lender eligibility, final loan amount, or Cash to Close. The lender’s disclosures and verified VA records control the transaction-specific result.
Borrowers can use the website’s loan comparison calculator to explore educational VA, FHA, Conventional, USDA, and Section 184 scenarios. The calculator is not a loan quote or approval decision.
Who May Qualify for a VA Funding Fee Exemption?
Under current VA guidance, some borrowers do not have to pay the funding fee. Potential categories include a Veteran receiving VA compensation for a service-connected disability; a Veteran eligible for that compensation but receiving retirement or active-duty pay instead; and a surviving spouse receiving qualifying Dependency and Indemnity Compensation.
Current guidance also lists certain pre-discharge ratings received before closing and active-duty Purple Heart recipients who provide timely evidence. VA records and lender documentation should confirm the status.
Does a VA Disability Rating Automatically Confirm an Exemption?
A disability rating alone may not answer the question because compensation status, records, and timing can matter. Review the official VA home loan eligibility guidance and ask the lender to verify the file.
Can an Eligible Surviving Spouse Be Exempt?
A surviving spouse receiving qualifying DIC is listed by VA as exempt from the funding fee. Home loan eligibility and the exemption should still be documented. The official VA surviving-spouse home loan guidance explains COE requirements and possible eligibility situations.
What Happens When a Disability Claim Is Still Pending?
A pending claim does not automatically remove the fee. A qualifying rating received before closing may affect treatment; a later retroactive compensation award may create a refund question for VA review.
Exemption information may appear on or be connected with the borrower’s Certificate of Eligibility. The website’s VA Loan Certificate of Eligibility guide explains what the COE confirms and why it does not replace lender underwriting.
Can the VA Funding Fee Be Financed?
The fee can generally be financed or paid in full at closing. Financing reduces the immediate cash need but increases principal and potential interest; paying cash keeps it out of the balance but raises Cash to Close. An exemption removes the fee, not other transaction costs.
Hypothetical example: Assume an applicable base loan amount of $250,000 and a 2.15% funding fee. The illustrated fee would be $5,375. Financing it could create a total starting balance of approximately $255,375 before considering any other allowed adjustments. Paying it in cash would leave the illustrated base loan amount unchanged but add $5,375 to the funds needed at closing.
This example is educational only. It is not a quote and does not account for exemption status, appraisal results, credits, interest rate, payment, lender charges, property taxes, insurance, or final underwriting.
A VA-experienced mortgage professional may help a borrower compare paying the fee upfront with financing it, but the final figures must come from the lender’s current disclosures.
How Does a Down Payment Affect the VA Funding Fee?
A qualified borrower may be able to obtain a VA purchase loan without a required down payment, but a down payment of at least 5% or at least 10% can place a non-exempt purchase or construction loan into a lower funding-fee tier under the current chart.
That does not mean making the larger down payment is automatically the best financial decision. The borrower is exchanging more cash today for a smaller loan amount and potentially a lower fee percentage. The comparison should include emergency reserves, monthly payment, expected time in the property, interest rate, investment priorities, and total borrowing cost.
A down payment may also be needed for reasons unrelated to the fee. Examples include covering a difference between the purchase price and reasonable value, working with partial entitlement, reducing the requested loan amount, or meeting a borrower-specific financial goal.
Borrowers should compare at least three numbers: total cash required, total financed balance, and estimated monthly payment. The funding-fee percentage is one input, not the entire decision.
For more information about when zero-down financing may be available and when additional funds may still be needed, review the VA Loan No Down Payment guide.
How Does the VA Funding Fee Differ by Loan Type?
How Does the Fee Work on a VA Purchase Loan?
For a non-exempt purchase borrower, the current percentage can depend on first or subsequent use and the down-payment tier. The fee applies to the applicable loan amount rather than simply the advertised purchase price.
Borrower eligibility, entitlement, credit, income, occupancy, appraisal, and lender underwriting still apply. The complete VA loan requirements guide explains those qualification factors.
How Does the Fee Work on an IRRRL?
The current listed funding fee for an Interest Rate Reduction Refinance Loan is 0.5%, unless an exemption applies. An IRRRL replaces an existing VA-backed loan and may be used to seek a lower payment or more stable terms, subject to eligibility and lender review.
Borrowers should review the official VA IRRRL guidance and compare closing costs, recoupment, the new loan term, and expected savings before refinancing.
How Does the Fee Work on a VA Cash-Out Refinance?
The current listed cash-out fee is 2.15% for first use and 3.3% after first use, unless an exemption applies. The fee does not change based on a down-payment tier.
The official VA cash-out refinance overview reminds borrowers to compare the new loan amount with property value, closing costs, equity, and long-term borrowing goals.
How Does the Fee Work on a VA Loan Assumption?
The current listed assumption fee is 0.5% of the assumed balance unless an exemption or permitted exception applies. Other processing, title, recording, tax, insurance, HOA, and financing costs may apply.
Review the complete VA Loan Assumption guide before comparing the existing rate, equity gap, seller liability, entitlement treatment, processing fees, and alternative financing.
VA assumption requirements and servicing procedures should be confirmed with the current loan holder or servicer. The VA’s home loan circulars and assumption updates provide official procedural guidance.
How May the Fee Apply to a VA Construction Loan?
VA currently groups eligible purchase and construction loans under the same funding-fee rate table. Construction financing involves additional lender, builder, land, plans, appraisal, inspection, draw, title, and completion requirements.
Not every VA-approved lender offers this specialized program. The VA Construction Loan guide explains the additional coordination involved.
Is the VA Funding Fee the Same as VA Loan Closing Costs?
No. The funding fee is one program charge. Closing costs can include lender, third-party, government, title, settlement, and other expenses, while prepaids cover items such as taxes, insurance, and interest.
| Cost Category | What It Covers | Can It Affect Cash to Close? | Can It Be Financed? |
|---|---|---|---|
| VA Funding Fee | One-time VA program charge for a non-exempt transaction | Yes, when paid in cash | Generally yes, subject to applicable rules |
| Down payment | Borrower equity that reduces the base loan amount | Yes | Generally no |
| Lender and third-party charges | Origination, appraisal, credit, title, settlement, recording, and related services | Yes, after permitted credits and payments | Purchase-loan treatment is limited; verify the transaction |
| Prepaid expenses | Interest, homeowners insurance, and property taxes tied to timing and ownership | Yes | Generally not on a standard purchase loan |
| Initial escrow deposits | Funds collected for future tax and insurance payments | Yes | Generally not on a standard purchase loan |
| Discount points | Upfront payment for selected loan pricing | Yes | Depends on the transaction and applicable rules |
| Earnest-money credit | Previously deposited contract funds credited in the final accounting | May reduce the remaining amount due | Not applicable |
Seller, builder, or lender credits and earnest money can change the final accounting. The contract, VA rules, and lender disclosures determine how permitted amounts are applied.
For a broader explanation of lender charges, third-party fees, prepaid items, escrow deposits, negotiated credits, and Cash to Close, review the VA loan closing-cost guide.
Can a Borrower Receive a VA Funding Fee Refund?
A refund may be available in limited circumstances. Current VA guidance states that a borrower may be eligible when VA later awards compensation for a service-connected disability and the effective date is retroactive to before the loan closing date.
The closing date, compensation effective date, official VA determination, loan records, and the way the fee was paid can matter. A proposed or memorandum rating received after closing does not by itself create the same refund eligibility described for a retroactive compensation award.
A cash-paid fee and a financed fee may be handled differently in practice because one came from the borrower’s closing funds and the other became part of the loan balance. Borrowers should contact VA and their lender or servicer for the current process rather than assuming how a refund will be delivered or applied.
No article, calculator, or mortgage estimate can guarantee a refund. Keep copies of the Closing Disclosure, Certificate of Eligibility, disability or compensation decision, and any funding-fee documentation when asking for review.
Where Does the VA Funding Fee Appear on Mortgage Disclosures?
The CFPB explains that the Loan Estimate gives early details about the requested mortgage, including estimated payment, costs, taxes, insurance, and Cash to Close. It is not final approval.
The Closing Disclosure provides final details for covered transactions and allows comparison with the earlier estimate.
Borrowers should check whether the funding fee is listed as financed or paid in cash, whether the exemption status is reflected, whether the loan amount includes the financed fee, and whether credits have been applied as expected. They should also separate lender charges from prepaid property expenses and escrow deposits.
- Is the funding fee financed or included in Cash to Close?
- Has the borrower’s exemption status been confirmed?
- Does the disclosed loan amount include the financed fee?
- Which seller or lender credits reduce the amount due?
- Which charges changed since the most recent Loan Estimate?
- Do the prepaid taxes, insurance, and interest reflect the expected closing date?
An estimate can change when important transaction information changes, subject to applicable disclosure rules. Ask for a specific explanation when a cost, credit, loan amount, rate, or Cash-to-Close figure differs from what you expected.
What Common VA Funding Fee Mistakes Should Borrowers Avoid?
- Assuming zero down means zero cost: Closing charges, prepaids, escrow deposits, and other funds may still be required.
- Treating the fee as ordinary lender income: It is a VA program charge, separate from lender pricing and third-party services.
- Using an outdated fee chart: Always check the current VA page and the effective date before calculating.
- Assuming an exemption: Disability, DIC, Purple Heart, or pre-discharge records must be verified under current requirements.
- Ignoring first or subsequent use: That classification can materially change a purchase or cash-out fee.
- Confusing earnest money with a new cost: Earnest money is usually paid earlier and may appear as a credit in the final accounting.
- Ignoring financing effects: Adding the fee to the loan increases the starting principal balance.
- Comparing only monthly payments: A longer term or larger balance can affect total interest and long-term cost.
- Relying on a calculator as a quote: Calculators cannot verify exemption status, entitlement, underwriting, value, or final credits.
- Waiting until closing to ask questions: Review the Loan Estimate early and compare it with the Closing Disclosure.
- Assuming every lender offers every VA product: Construction, assumption, and refinance availability can differ.
For concise answers about eligibility, entitlement, funding fees, closing costs, repeat use, and refinancing, visit the website’s VA loan FAQ library.
How Can Oklahoma Borrowers Prepare Before Applying?
Borrowers in Tulsa, Broken Arrow, Bixby, Jenks, Owasso, Claremore, Oklahoma City, Edmond, Norman, and other Oklahoma communities can prepare by separating eligibility questions from loan qualification and transaction costs.
- Request or review the Certificate of Eligibility.
- Confirm service history, entitlement, and prior VA loan use.
- Ask whether the funding-fee status on the file shows exempt or non-exempt.
- Identify whether the transaction is a purchase, construction loan, IRRRL, cash-out refinance, or assumption.
- Estimate available funds while protecting emergency reserves.
- Separate the down payment, funding fee, closing costs, prepaid expenses, escrow deposits, and moving costs.
- Compare financing the fee with paying it in cash.
- Ask how seller, builder, or lender credits may be applied.
- Prepare income, employment, asset, housing, and identity documents requested by the lender.
- Review the Loan Estimate and ask about anything that differs from the initial discussion.
- Avoid opening new credit, moving large undocumented funds, or making major purchases before closing without discussing the effect with the lender.
- Verify final wire instructions through a trusted channel before transferring closing funds.
The official VA page allows eligible borrowers to request a Certificate of Eligibility. A COE helps document benefit eligibility, but loan approval still depends on the borrower, property, lender requirements, appraisal, title review, and underwriting.
The website’s COE guide explains the request process and entitlement details, while the VA loan requirements guide covers credit, income, debt, residual income, occupancy, property, and lender review.
Before serious home shopping, borrowers should review their documentation, realistic price range, estimated Cash to Close, and available reserves. Jeff Leek can help eligible Oklahoma borrowers organize questions about possible exemptions, funding-fee treatment, expected costs, and loan options.
How Can Jeff Leek Help Review the VA Funding Fee?
Jeff Leek may help eligible borrowers understand how the funding fee fits into a broader VA purchase, refinance, construction, or assumption transaction.
A review may include the borrower’s COE, entitlement, potential exemption status, first or subsequent use, down-payment options, estimated closing costs, Cash to Close, and whether financing the fee changes the starting loan balance.
Jeff may also help compare VA financing with other available mortgage programs. Final fee treatment, eligibility, rates, loan terms, property approval, costs, and underwriting decisions remain subject to current VA and lender requirements.
Learn more about Jeff’s local experience, licensing, VA specialty knowledge, and approach to borrower guidance on the Jeff Leek mortgage advisor homepage.
What Should Borrowers Know About the VA Funding Fee?
How Much Is the VA Funding Fee?
The amount depends on the current percentage, applicable loan amount, transaction type, first or subsequent use, down-payment tier where relevant, and exemption status. Under the current chart, rates range from 0.5% for certain transactions to 3.3% for some subsequent-use purchase or cash-out loans.
Who Is Exempt From the VA Funding Fee?
Current VA guidance lists several categories, including certain borrowers receiving or eligible for service-connected disability compensation, qualifying surviving spouses receiving DIC, eligible pre-discharge cases, and active-duty Purple Heart recipients. VA and lender documentation must confirm the exemption.
Can the VA Funding Fee Be Included in the Loan?
It can generally be financed into an eligible VA loan or paid in full at closing. Financing reduces the immediate cash requirement but increases the principal balance and may increase total interest.
Does a Down Payment Reduce the VA Funding Fee?
For a non-exempt VA purchase or construction loan, a down payment of at least 5% or at least 10% can qualify for a lower percentage under the current rate chart. The financial tradeoff should be reviewed rather than choosing a down-payment level based only on the fee.
Is the VA Funding Fee Charged on a Refinance?
It may apply. The current listed rate is 0.5% for an IRRRL, 2.15% for a first-use cash-out refinance, and 3.3% for a subsequent-use cash-out refinance, unless the borrower is exempt.
Can the VA Funding Fee Be Refunded?
A refund may be available when VA later awards qualifying compensation with an effective date retroactive to before closing. Eligibility and handling must be confirmed with VA and the lender or servicer.
Readers can explore the full collection of VA loan and mortgage articles for related guidance about eligibility, Certificates of Eligibility, no-down-payment financing, closing costs, assumptions, construction loans, and VA qualification requirements.
Last Reviewed: June 17, 2026
Reviewed By: Jeff Leek, NMLS 303051
