How Much is the VA Loan Funding Fee?
What is the VA Funding Fee?
The VA funding fee is a one-time payment that can be paid upfront by the borrower upon purchasing their home with a VA-backed loan. This fee can also be rolled into the mortgage. This funding fee applies to both VA home purchases and VA refinances.
This funding fee goes directly to the Department of Veterans Affairs and is not collected by the mortgage lender. The funding fee helps support the costs of the VA guaranty.
How Much is the VA Funding Fee?
The amount of the funding fee depends on whether you make a down payment or not and whether you have had a VA-backed loan before.
If this is your first time using your VA loan benefit, the funding fee is 2.15% of the loan amount with a down payment less than 5%, 1.5% of the loan amount with a down payment of 5% to 9.9%, and 1.25% of the loan amount with a down payment of 10% or more.
If this is your second or subsequent use of the VA loan benefit, the funding fee is 3.3% for loans with less than a 5% down payment, 1.5% for a loan with a down payment of 5% or more, and 1.5% for a loan with a down payment of 10% or more.
For a Streamline Refinance or Interest Rate Reduction Refinance Loan (a VA IRRRL loan) the funding fee is 0.5% of the mortgage across the board, whether it is your first or second time securing an IRRRL loan. The funding fee for VA-backed cash-out refinancing loans is 2.15% for the first use and 3.3% subsequently.
How the VA Funding Fee is Calculated
Suppose you are getting a VA loan for the first time and you are purchasing a home for $300,000 and paying a down payment of $15,000 (5% of the $300,000 loan). You will pay a VA funding fee of $4,275.00 (285,000 * 0.015), which is 1.5% of the $285,000 loan amount.
Note: The funding fee does not apply to the purchase price of the home, only to the VA loan amount.
Who Pays the VA Funding Fee?
Anyone securing a VA-backed home loan to purchase, construct, renovate, or repair their home or to refinance a mortgage, is required to pay the funding fee.
Who is Exempt From Paying the VA Funding Fee?
Anyone who meets the following criteria is exempt from paying the funding fee:
- If you receive VA compensation for a service-connected disability
- If you are eligible to receive VA compensation for a service-connected disability but are receiving retirement or active-duty pay instead.
- If you are the surviving spouse of a Veteran who died in service or died from a service-connected disability, or who was completely disabled, and you are receiving Dependency and Indemnity Compensation (DIC).
- If you are a service member with a proposed or memorandum rating, before the loan closing date, saying you’re eligible to get compensation because of a pre-discharge claim.
- If you are a service member on active duty who before or on the date of the loan closing, provides evidence of having received the Purple Heart.
- If you fall into any of the above categories, you will not be required to pay a funding fee.
You also may be eligible for a refund of the funding fee if you are awarded VA compensation for a service-connected disability after purchasing a VA mortgage.
Contact a VA Loan Specialist
Interested in getting pre-qualified for a VA loan? VeteransLoans.com is a full-service VA-approved mortgage lender. Our loan specialists can determine your VA eligibility and get you pre-qualified in a matter of minutes! Call 1 (888) 232-1428 to speak with a VA loan specialist today.