Last reviewed: 3 October 2026
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The VA funding fee, explained
The VA funding fee is a one-time charge on a VA-backed or VA direct home loan. This page repeats what the VA says about who pays it, who does not, how it can be paid and how it is set.
What this term means: The funding fee is the VA’s term. The VA says the fee helps lower the cost of the loan for U.S. taxpayers because the VA home loan program does not require down payments or monthly mortgage insurance.[1] A Loan Estimate is the form a lender gives you showing the loan terms and costs.
Who does not have to pay
The VA says you will not have to pay the funding fee if any one of these descriptions is true for you.[1]
- You are receiving VA compensation for a service-connected disability.[1]
- You are eligible to receive VA compensation for a service-connected disability, but you are receiving retirement or active-duty pay instead.[1]
- You are receiving Dependency and Indemnity Compensation (D.I.C.) as the surviving spouse of a Veteran.[1]
- You are a service member who received a proposed or memorandum rating before the loan closing date that says you are eligible to get compensation because of a pre-discharge claim.[1]
- You are an active-duty member of the Armed Forces and, on or before your loan closing date, you provide evidence that you received a Purple Heart.[1]
Refunds
The VA says you may be eligible for a refund if you are later awarded VA compensation for a service-connected disability and the effective date of that compensation is retroactive to before your loan closing date.[1] If you get a proposed or memorandum rating after your loan closing date, you still pay the fee and are not eligible for a refund based on that rating.[1]
How the fee can be paid
You pay the fee when you close the loan, either by including it in the loan amount (financing) or by paying all of it at closing.[1] On a purchase or construction/permanent loan, the VA says the funding fee is the only cost you can finance into the loan amount; you must pay the other fees and charges when the loan closes.[1]
How the amount is set
For all loans, the VA bases the fee on the type of loan and the total loan amount. Depending on the loan type, it may also consider whether this is your first use of a VA-backed or VA direct loan and your down payment amount.[1] The VA’s own example: a first-time user buying a $200,000 home with a $10,000 down payment pays 1.5% of the $190,000 loan amount, which is $2,850, because the fee applies to the loan amount and not the purchase price.[1]
The VA publishes the charts below. They are labelled “Effective April 7, 2023” and the VA page was last updated 22 September 2026. Check the VA page for the current charts before relying on a figure.
VA-backed purchase and construction loans
These rates are for Veterans, active-duty service members, and National Guard and Reserve members; amounts are a percentage of the total loan amount.[1]
| Use | Down payment | VA funding fee |
|---|---|---|
| First use | Less than 5% | 2.15% |
| First use | 5% or more | 1.5% |
| First use | 10% or more | 1.25% |
| After first use | Less than 5% | 3.3% |
| After first use | 5% or more | 1.5% |
| After first use | 10% or more | 1.25% |
The VA adds that if you used a VA-backed or VA direct loan in the past to purchase only a manufactured home, you still pay the first-time rate.[1]
VA-backed cash-out refinancing loans
| Use | VA funding fee |
|---|---|
| First use | 2.15% |
| After first use | 3.3% |
The VA says the rates for refinancing loans do not change based on your down payment amount.[1]
Other VA loan types
| Loan type | VA funding fee |
|---|---|
| Interest rate reduction refinancing loan (IRRRL) | 0.5% |
| Manufactured home loan (not permanently affixed) | 1% |
| Loan assumption | 0.5% |
| Vendee loan, for purchasing VA-acquired property | 2.25% |
| Native American Direct Loan, purchase | 1.25% |
| Native American Direct Loan, refinance | 0.5% |
The VA says these rates do not change based on your down payment or on whether you have used the program before.[1] Our guide to the VA interest rate reduction refinance loan explains that loan type.
Fee, closing costs and seller credits
The VA says your lender, not the VA, determines the interest rate, discount points and other closing costs, and that you and the seller can negotiate who pays certain closing costs.[1] It says seller concessions, which include credits for the VA funding fee, are limited to no more than 4% of the home’s value as shown on the VA Notice of Value.[1] See our guide to what mortgage closing costs include.
How to verify this yourself
Open VA.gov, go to Housing assistance, then VA home loans, then Funding fee and closing costs, and read the chart for your loan type. Your Loan Estimate and Closing Disclosure show the funding fee your lender has charged; our guide to reading the Loan Estimate shows where costs appear. The VA names its regional loan center as the place to ask about a possible refund. Our published standard and the Register cover how we check loan originators, not the fee.
What this page does not cover
This page is general information, not legal advice. It covers the funding fee only, not VA eligibility, entitlement or the Certificate of Eligibility, and it does not compare the fee with the cost of any other loan. Whether you have to pay the fee, and how much, depends on your own service record, loan type and loan amount; the VA decides. The rate charts are the VA’s as labelled and may change. The VA page was last updated 22 September 2026. This page was last reviewed 3 October 2026.
Your next step
Find your loan type in the VA’s chart, then ask your lender to show the funding fee line on your Loan Estimate and whether it is financed or paid at closing. Return to the Mortgage help library for related guides.