The VA funding fee is a one-time charge on a VA home loan that helps pay for the program, which is how VA loans offer $0 down with no monthly mortgage insurance. It's a percentage of the loan amount set by two things: your down payment and whether you've used a VA loan before. You can pay it at closing or finance it into the loan.
VA funding fee rates on a purchase
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
These rates apply to veterans, active-duty service members, and Guard and Reserve members. On a purchase, the funding fee is the only closing cost VA lets you roll into the loan. Everything else is paid at closing by you, the seller or a gift.
Who pays no funding fee
- Veterans receiving VA compensation for a service-connected disability, and those eligible for it who receive retirement or active-duty pay instead
- Surviving spouses receiving Dependency and Indemnity Compensation
- Service members who received a proposed or memorandum disability rating before the closing date
- Active-duty service members who show evidence of a Purple Heart on or before closing
Your Certificate of Eligibility, the VA document that confirms your entitlement, shows whether you're exempt. We check it before your Loan Estimate goes out so the fee is right from the start.
A $340,000 VA purchase with $0 down
A veteran using a VA loan for the first time buys a $340,000 home with no down payment. The fee is 2.15% of $340,000, or $7,310, and financing it brings the loan to $347,310.
- Principal and interest on $340,000 at a 5.75% rate: $1,984.15
- Principal and interest on $347,310: $2,026.81
- Monthly cost of financing the fee: $42.66
The buyer brings nothing for the fee and pays $42.66 a month for it. On a second VA purchase with $0 down, the same veteran would pay 3.3%, or $11,220. Putting 5% down ($17,000) cuts the rate to 1.50% of the $323,000 loan, a fee of $4,845, whether it's a first or later use.
A veteran with a service-connected disability rating skips the fee entirely, and the loan stays at $340,000. Because the financed fee is part of the payment, it also counts when VA figures residual income, the money left each month after the house payment, debts and living costs.
Plug your price into Price Check to see a VA payment with the fee built in. Or call AAA Capital Funding at 888-601-8344 and we'll confirm your funding fee from your Certificate of Eligibility before you write an offer.