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VA funding fee and loan closing costs

Learn about the VA funding fee and other closing costs you may need to pay on your VA-backed or VA direct home loan.

About the VA funding fee

What is the VA funding fee?

The VA funding fee is a one-time payment that the Veteran, service member, or survivor pays on a VA-backed or VA direct home loan. This fee helps to lower the cost of the loan for U.S. taxpayers since the VA home loan program doesn’t require down payments or monthly mortgage insurance.

Will I have to pay the VA funding fee?

If you’re using a VA home loan to buy, build, improve, or repair a home or to refinance a mortgage, you’ll need to pay the VA funding fee unless you meet certain requirements.

You won’t have to pay a VA funding fee if any of the below descriptions is true for you. You’re:

  • Receiving VA compensation for a service-connected disability, or
  • Eligible to receive VA compensation for a service-connected disability, but you’re receiving retirement or active-duty pay instead, or
  • The surviving spouse of a Veteran who died in service or from a service-connected disability

You may be eligible for a refund of the VA funding fee if you're later awarded VA compensation for a service-connected disability. The effective date of your VA compensation must be retroactive to before the date of your loan closing. 

If you think you're eligible for a refund, please call your VA regional loan center at 877-827-3702. We’re here Monday through Friday, 8:00 a.m. to 6:00 p.m. ET.

How will I pay this fee?

You’ll pay this fee when you close your VA-backed or VA direct home loan.

You can pay the VA funding fee in either of these ways:

  • Include the funding fee in your loan and pay it off over time (called financing), or
  • Pay the full fee all at once at closing

How much will I pay?

This depends on the amount of your loan and other factors.

For all loans, we’ll base your VA funding fee on:

  • The type of loan you get, and
  • The total amount of your loan. We’ll calculate your funding fee as a percentage of your total loan amount.

Depending on your loan type, we may also base your fee on:

  • Your military category, and
  • Whether it’s your first time using a VA-backed or VA direct home loan, and
  • Your down payment amount

Note: Your lender will also charge interest on the loan in addition to closing fees. Please be sure to talk to your lender about any loan costs that may be added to your loan amount.

VA funding fee rate charts

Effective through September 30, 2028, based on Public Laws 112-56 and 115-182

Review the VA funding fee rate charts below to determine the amount you’ll have to pay. Down payment and VA funding fee amounts are expressed as a percentage of total loan amount.

For example: If you’re using a VA-backed loan for the first time and you’re taking out a loan of $200,000 and paying a down payment of $10,000 (5% of the $200,000 loan), you’ll pay a VA funding fee of $3,000 (1.5% of the $200,000 loan).

VA-backed purchase and construction loans

Rates for Veterans and service members with active-duty service

If your down payment is… Your VA funding fee will be…
First use Less than 5% 2.15%
5% or more 1.5%
10% or more 1.25%
After first use Less than 5% 3.3%
5% or more 1.5%
10% or more 1.25%

Rates for National Guard and Reserve members

If your down payment is… Your VA funding fee will be…
First use Less than 5% 2.4%
5% or more 1.75%
10% or more 1.5%
After first use Less than 5% 3.3%
5% or more 1.75%
10% or more 1.5%

Note: If you only used a VA-backed or VA direct home loan to purchase a manufactured home in the past, you’ll still pay the first-time funding fee.

VA-backed cash-out refinancing loans

Rates for Veterans and service members with active-duty service

First use After first use
2.15% 3.3%

Rates for National Guard and Reserve Veterans and members

First use After first use
2.4% 3.3%

Note: The VA funding fee rates for refinancing loans don’t change based on your down payment amount. If you used a VA-backed or VA direct home loan to purchase a manufactured home, you only need to pay the first-time use funding fee.

Native American Direct Loan (NADL)

Type of use VA funding fee
Purchase 1.25%
Refinance 0.5%

Note: The VA funding fee rate for this loan doesn’t change based on your military category, your down payment amount, or whether you’ve used the VA home loan program in the past.

Other VA home loan types

Loan type VA funding fee
Interest Rate Reduction Refinancing Loans (IRRRLs) 0.5%
Manufactured home loans (not permanently affixed) 1%
Loan assumptions 0.5%

Note: The VA funding fee rates for these loans don’t change based on your military category, your down payment amount, or whether you’ve used the VA home loan program in the past.

Other loan closing costs

Who determines my loan details?

We don’t determine most details of your home loan.

Your home loan lender will determine these details of your loan:

  • Interest rate
  • Discount points (fees you may pay to your lender at closing to get a lower interest rate on your loan)
  • Other closing costs

These rates may vary from lender to lender. You should know that adding the VA funding fee and other loan costs to your loan could lead to you owing more money than the fair market value of the home. This could reduce the benefit of refinancing since your payment wouldn’t be as low as you may want it to be. It could also make it harder for you to get enough money out of the future sale of the home to pay off your loan balance.

Who pays for which closing costs?

The seller must pay these closing costs (sometimes called “seller’s concessions”):

  • Commission for real estate professionals
  • Brokerage fee
  • Buyer broker fee
  • Termite report (unless you’re using a refinancing loan)

You (the buyer) or the seller can negotiate who will pay other closing costs such as the:

  • VA funding fee
  • Loan origination fee
  • Loan discount points or funds for temporary “buydowns”
  • Credit report and payment of any credit balances or judgments
  • VA appraisal fee
  • Hazard insurance and real estate taxes
  • State and local taxes
  • Title insurance
  • Recording fee

Note: We require that a seller can’t pay more than 4% of the total home loan in seller’s concessions. But this rule only covers some closing costs, including the VA funding fee. The rule doesn’t cover loan discount points.

 

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